Jet kickstarts Round-II of fare war

Last Updated: Wed, Feb 20, 2013 04:43 hrs

Jet Airways on Tuesday kicked off an air fare battle by announcing it would offer two million tickets at discounted prices - between Rs 2,250 and Rs 3,800, depending on distance. These would be 30-50 per cent cheaper than normal tickets.

Travel portals say the aggressive offer is for about eight per cent of the total number of seats the airline sells on an average over 10 months. The discount-offer tickets, available for both economy full-service and low-cost arms and valid for travel till December-end, could be booked till February 24. The move would help the airline boost its low passenger load factor (of around 70 per cent) in the lean months of February and March, besides its revenue from each flight, experts say.

Responding quickly to the move, rivals IndiGo and GoAir also dropped their fares on various routes, though they did not make any formal announcement on this. Their fares on some of the competing routes are even lower than those of Jet (see table).

Jet's move comes a few weeks after SpiceJet surprised the market by offering a million seats (for a three-month period) at a rock-bottom fare of Rs 2,013. The airline was able to sell over 700,000 tickets and rake in Rs 160 crore from its three-day sale. COO Sharat Dhall says: "As Jet is offering discounted tickets across peak and lean seasons, we believe it will release more seats during the lean season and less in the peak."

The fares on offer, however, are substantially lower than what Jet had declared to the government as its lowest. For instance, the basic fare on the lowest bucket for Delhi-Mumbai is Rs 1,630 - around five times higher than the Rs 348 it is offering. After adding airport development fees and fuel charges, the fare difference comes to 40 per cent.

"We want to stimulate the market. For far too long, we have been passive on price actions and innovation," said a senior Jet executive. Some passengers complained of difficulty in accessing the airline's booking engine, but the executive denied any problem with the website. "We will probably be able to sell all seats within 24 hours," he claimed. However, travel portals say, the lowest fares have already been booked in many of the popular sectors.

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