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Budget Carriers In Price War, SpiceJet Fares Down 50%

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Anticipating a weak demand in the traditionally lean January-March period, most domestic airlines today reduced fares massively after no-frills carrier SpiceJet announced a steep 50 per cent discount on base fares and fuel surcharges across sectors.

The SpiceJet move was copied soon by two other budget carriers - IndiGo and GoAir - as well with similar offers, said travel agents.

However, the airlines' officials were not available for confirmation.

Triggering a fresh bout of fare war, SpiceJet announced a 50 per cent rebate on base fares and fuel surcharge on all flights for travel 30 days ahead of booking.

"This kind of limited period off-season sale is a routine practice in the airline industry across the world and tactical inventory management, to help airlines fill seats that would otherwise go empty. It is revenue-positive for the airline," a SpiceJet spokesperson said.

The offer is valid for a three-day period starting today, the Chennai-based airline said, adding that the special offer will end on January 23 midnight.

"IndiGo and GoAir too have come out with similar offers," a travel agent said.

The move is being seen as an attempt by carriers to mop up funds for the March quarter, which is traditionally a weak period both from demand and revenue points of view.

"SpiceJet and Indigo slashing airfares is an attempt to garner early bookings for the coming summer season," travel portal president Sharat Dhall said.

Under the offer, SpiceJet is offering fares as low as Rs 3,579 for the Mumbai-Delhi route where spot fares are as high as Rs 10,098, while a Delhi-Goa ticket comes at Rs 3,355 where the spot-fare is about Rs 6,000 now.

With other airlines likely to follow suit, travellers are finally getting respite from the high airfares and will take advantage of these great prices to book their holidays in advance, Dhall said.

MakeMyTrip has seen a 250 per cent rise in bookings within hours of the prices being reduced, he said, adding, "We expect this to go up even further as word about the offer spreads."

MakeMyTrip said, "SpiceJet, Indigo and GoAir have announced sales on 30-60 day advance purchase window. We have seen a very good response."

MakeMyTrip co-founder and chief executive Rajesh Magow said, "After success with similar promotions last year, airlines seem to have hit on a winning formula to energise the sector. Thus, airlines are able to drive purchases further out, improve forward-loads and yields by incentivising earlier purchases and gain yield predictability by filling up seats earlier," Magow said.