AirAsia's Rs 5 basic fare offer has triggered competition and criticism from rivals, with market leader IndiGo launching a Rs 1 basic fare on AirAsia's inaugural routes and SpiceJet Chief Operating Officer Sanjiv Kapoor questioning the silence of the Directorate General of Civil Aviation (DGCA) on the price war.
On Friday night, AirAsia said it was offering 15,000 tickets at a basic fare of Rs 5 on the Bangalore-Goa and Bangalore-Chennai sectors. In reaction, IndiGo launched its Rs 1 basic fare on these routes. The fares of both exclude taxes and fees. An all-inclusive fare on the Bangalore-Goa route works to Rs 490.
On Saturday afternoon, AirAsia said it was offering another 10,000 seats on the routes for travel from June 12 to October 25. "Wow! Received overwhelming response to our Goa & Chennai routes. I have decided to have additional Rs 5 promo fares," AirAsia India Chief Executive Mittu Chandilya tweeted. The airline didn't disclose how many tickets it sold in the promotional offer, open till Sunday.
AirAsia will be operating six flights between the two routes (three departures and arrivals each), offering a daily capacity of 1,080 seats in its Airbus A320 planes. The number of seats offered, assuming the number of flights remains the same till October 25, is 143,640 and discounted tickets make a tenth of AirAsia's seat capacity.
At present, there are five daily flights between Bangalore and Goa and 14 between Bangalore and Chennai.
Samyukth Sridharan, chief operating officer, Cleartrip, said, "We have seen a jump in bookings on both the Bangalore-Goa and Bangalore-Chennai routes. Sales have been higher on the Bangalore-Goa route. We have observed most bookings take place for travel in June, July and the weekend around Gandhi Jayanti (October 2) and Independence Day (August 15)."
Other portals, however, were more cautious. Sharat Dhall, president of Yatra.com, said, "The discounts are being offered on one or two flights. We will see the real impact of the discounts only when discounted fares are available on a wider network."
While customers lapped up the discounts, SpiceJet took potshots at the aviation regulator for not cracking the whip on AirAsia and IndiGo. "What is predatory, disruptive, dangerous? Offering Rs 5 fare in the peak season and that too within 14 days of travel. Let us wait and watch," the airline's Kapoor tweeted. In another tweet, he said SpiceJet was not offering Rs 5 fare. In April, DGCA had stopped SpiceJet from selling seats at Rs 1.
Provisions regarding predatory pricing are laid down in the Aircraft Rules, 1937, and the Competition Act. The Competition Commission can initiate action by itself or on receiving complaints of predatory pricing. The commission examines whether the airline has a dominant position in a market where it indulges in predatory pricing and if that could kill competition.
DGCA can issue directions to airlines if it finds these are engaged in predatory or excessive pricing. However, the Aircraft Rules do not specify a threshold of seats that could be sold at a discount. An aviation ministry official, too, said there was no clear policy on monitoring fares.
HOW CHEAP IS AIRASIA INDIA?
Tickets: AirAsia India offering a ticket for Rs 490 on the Bangalore-Goa route, including taxes. Like rivals, extra charge for meals.
Processing fee: Rs 80-200 (for tickets bought with debit or credit cards or through sales office). Rivals charge around Rs 100 as convenience fee for payment made credit cards.
*Refund fee: Rs 240
*Flight change/cancellations: Rs 1,500 (in line with rivals)
Seat choice: Rs 300-600 (Rivals charge between Rs 200 and Rs 600)
Checked baggage (booked online): Rs 199 for up to 15 kg; Rs 498 for 15-20 kg. Rivals don't charge for up to 15 kg
Checked baggage at airport: Rs 300 for up to 15 kg