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The three-day discount sale launched by domestic airlines have boosted forward bookings of carriers in February and March, a lean season for travel. With average occupancy of less than 20 per cent on flights in those months, airlines slashed fares, offering tickets at a 50 per cent discount. SpiceJet was the first to do so and others followed.
The discount offer has brought back passengers, with those not planning to take air trips changing their minds and booking. Sectoral sources say occupancy was less than 20 per cent on flights 30 days from now; at present,these flights are up to 50 per cent full. “There has been an increase in bookings from individuals and families who would see air travel as discretionary spending,” said one. Airlines are now hoping to recover the loss by selling higher fare slabs but this might prove difficult.
On an average, domestic airlines sell 40,000-50,000 tickets daily. Domestic airlines operate Boeing 737s and the Airbus A320, with a capacity of 180-190 seats per aircraft. The operating costs and break-even seat factor varies from route to route and airline to airline. “A low cost airline would need to earn Rs 7-8 lakh on a one-hour flight to break even, while the earning of a full service airline would have to be higher. Assuming an airline can fill 70 per cent of seats (125-130 of the 180-190 in a plane), it will have to charge a net fare of Rs 5,500-6,300 a passenger to earn that. If it has sold a certain number of seats at a discount, it will have to increase its occupancy to more than 70 per cent to earn Rs 7-8 lakh. The question is if airlines be able to fill the unsold seats at higher fares. The break-even is still an issue, as operating costs are high,” an aviation expert said.
A positive factor for an airline is that sales help in generating a cash flow. Demand in the season is less, so bookings are low. "The limited period discount offer help stimulate demand in a lean quarter. It will help generate cash for the airline. The seats on offer were chosen carefully without compromising flights with high demand. This will also help to widen the narrow flyer-base of the country. So overall, it’s a good move,'' said Amber Dubey, Partner and head-Aerospace and Defence at global consultancy KPMG.
"The visitor traffic to our website went up four times. We expect the momentum to continue for the next couple of days as well. The city-booking trends were comparable to non-sale periods, with Delhi, Mumbai and Bangalore contributing to the maximum bookings, but some sectors became more popular during the sale due to the discounts being offered. For example, Delhi-Bangalore that is not among the 5 Top-selling sectors on normal days, was the second-most-booked sector during the sale period. Bookings on the Bangalore-Delhi route grew by 800%. We saw maximum bookings of 22% coming in from Delhi followed by 17% bookings from Mumbai and 13% from Bangalore. Unlike last year, Airlines have been more disciplined this time and discounted advance purchase only.” - Rajesh Magow, Co-founder & CEO-India, MakeMyTrip.
"Bookings have grown by 40% in terms of sales and transactions have grown by 60% in last two days. Booking systems were stable compare to last year so transactions are happening with ease this time,'' said Manoj Samuel, director of Riya Travels. Last year airline reservation systems were unable to handle the load during the sale offer and there were rumours of systems crashing.
