To fill seats, airlines have resorted to fare wars following the adverse impact on ticket sales, reports Arindam Majumder.
IMAGE: Passengers disembark from an IndiGo Airlines aircraft at Bengaluru International Airport. Photograph: Vivek Prakash/Reuters.
A billboard outside Rajiv Gandhi Bhavan, where the civil aviation ministry is located, tries to enlighten the crowd about the benefits of Prime Minister Narendra Modi’s attack on black money through the demonetisation move.
But the airlines the ministry regulates, say there has been an adverse impact on ticket sales in a potentially good season.
To fill seats, airlines have resorted to fare wars, offering tickets for as low as a few hundreds. Low-cost carrier SpiceJet on Monday launched an all-inclusive one-way fare of Rs 737 on several routes covering distances up to 500 km. Tickets that can be booked up to Thursday are valid for travel between January and October 2017.
Market leader IndiGo is offering fares of Rs 1,048 on certain routes such as Jammu-Srinagar, Delhi-Jaipur, and Lucknow-Delhi.
“Overall, sales are down by up to 10
per cent. Small agents (
had) customers paying in cash and that channel is impacted,” said SpiceJet spokesperson Ajay Jasra.
Another airline executive termed the demonetisation drive a ‘perfect remedy for disaster’ for the sector. “Pre-planned trips are being cancelled as people are reluctant to travel due to the uncertainty caused by the government’s unexpected move. Ticket price was anyway low; low bookings are adding to the woes.”
Even full-service carrier Jet Airways has launched a low-fare package, with all-inclusive fare of Rs 1,048 on many prime routes.
The year’s third and fourth quarters are considered to be healthy for airlines as most of the leisure travel happens during the months of November to February. “Despite the third quarter being a strong one, it seems the road to recovery of fares will take longer than expected. There is a chance of an overall 10 per cent decline in average fares for FY17,” said a Mumbai-based analyst who tracks listed airlines.
While airlines had noticed a spike in airport counter sales immediately after the demonetisation announcement, that has dwindled after tickets sold there in exchange for high-denomination notes were made non-cancellable and non-refundable.