Don’t miss the latest developments in business and finance.

Asked whether DGCA would warn airlines against indulging

Image
Press Trust of India
Last Updated : Feb 20 2013 | 8:35 PM IST
in predatory pricing of air tickets as it had done when Kalanithi Maran-owned SpiceJet had offered ten lakh seats at Rs 2,013 for a limited period, the Civil Aviation Minister merely said the fares would not be regulated and made more transparent. After the SpiceJet move to slash fares last month, the aviation regulator had urged other airlines not to follow suit as such a practice could be harmful to their financial bottomline that was already in trouble. Vikram Malhi, Country Head of travel portal Expedia, said the drop in fares would help airlines fill up their seats and increase their load factors. Observing that an average of between 20-25 per cent of seats went vacant on each flight, he said the airlines are aiming to fill up these seats and bolster traffic on weaker routes. Malhi said the earlier low fare offering by Spicejet had a booking window of three days which was "too short" restraining all tickets on offer to be sold. But the latest offer of Jet was "open for a longer period of six days for travel throughout the year" and, therefore, was likely to see higher response from travellers. Through this measure, industry sources said Jet was seeking to attract passengers away from its rivals and raise an immediate cash buffer of about Rs 400 crore. The high airfares throughout last year, caused primarily by the grounding of Kingfisher Airlines, had led a substantial chunk of passengers to opt out of air travel. This had led to negative growth in traffic for the first time since 2009. But the recent low fare offers by the airlines could lead to attracting these air travellers back to flying. The sources said the dip in fares would also help airlines to fill in the extra capacity they have introduced by getting new planes.

More From This Section

First Published: Feb 20 2013 | 8:35 PM IST

Next Story