Weak demand forces airlines to drop fares

Source : BUSINESS_STANDARD
By : BS Reporter
Last Updated: Sun, Dec 08, 2013 04:18 hrs
India's SpiceJet aircraft prepares for landing at the airport in Mumbai

Tour operators and travel agents say bookings for holiday travel have been slow and overall  demand for air travel during Christmas and New Year break is tepid. On Friday SpiceJet and IndiGo lowered fares on certain domestic and international  flights with low loads in a limited sale offer. GoAir too is offering 50 percent discount on selected flights.

The third quarter is traditionally good quarter for the domestic airlines due to Diwali and Christmas holidays. This period also sees a lot of arrivals of foreign tourists and NRIs which helps to improve load factors. This year however due to 20 percent higher fares demand has remained slack forcing airlines to offer discounts. A lukewarm travel season means bad news for airlines which have not been able to recover their operating costs and are making huge losses.


"Flight loads are yet to pick up for Christmas and New Year travel. The fares are higher now in comparison to last  December. Also there has been an increase in capacity. That is why airlines are offering discounts on certain flights with low loads. Overall bookings have been tepid to destinations like Goa and Rajasthan. January and February will be bad from occupancy view point as travel season ends and the industry expects airlines to introduce discount fares in those months,'' said Manoj Samuel, Riya Travels

"The latest discount offers are a way to shore up demand. The airlines are trying to attract last minute travellers with a price drop. Overall the demand has been flat since the ticket prices went up in October. The discountt tickets are being offered on routes and flights have very low factors,'' said Sharat Dhall, president of online portal Yatra.com

"In recent times, the air fares have remained firm though airline load factors have remained fluid. This offer though valid for 2 days will ensure advance bookings  and is a good measure to fuel demand. It is a welcome respite from spiraling airfares and fuel surcharges and can bring good cheer to the travelers," said Suraj Nair, senior vice president - Strategy & Planning, Thomas Cook.

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