Will Air India's Jaldi Jaldi scheme trigger fare war?

Moneycontrol Bureau

At a time when airline operators are crying hoarse about higher operating cost and steep losses, will Air India's 'Jald Jaldi' scheme upset them?

Air India has launched a special promotional scheme in which an all inclusive Mumbai-Delhi fare would be Rs 3,699 which is almost 80% less than what it is on other days. The sale opens on November 19 and closes on 21st of the same month and tickets booked through the scheme is for travel on specified domestic sector between Jan 16-March 31, 2013.

The fares, inclusive of all taxes, under this scheme have been kept low ranging from Rs 1,799 to Rs 4,199. The fares quoted are for one-way journeys. The fares have been launched for travel on more than 325 city pairs.

Some of the fares under the scheme include Kolkata-Bhubaneswar Rs 1,799, Delhi-Kolkata Rs 3,699; ChennaiMumbai Rs 2,699; Delhi-Mumbai Rs 3,699; Chennai-Kolkata Rs 2,699; Kochi-Trivandrum Rs 1,799 and Chennai-Pune Rs 1,799. The tickets can be booked through the airline's website.

Why has Air India come out with the scheme when all airlines are bleeding?

Air India is going aggressive to re-gain market which it has lost to rival carriers due to strikes and flight cancellations in the past. It is slowly gaining market share which is very critical for it to sustain in times to come.

Subash Goyal, chairman of hospitality chain STIC said that overall airlines have 75% load factors on an average. Air India has taken a smart move by offering discounts on seats which are anyways remain unsold. "Seats on an aircraft are a perishable commodity and once the aircraft takes off, seat which is unsold will never fetch any yields. Hence AI is offering discounts but on limited seats on each sector," added Goyal.

Will other airlines follow trend?
As of now, none of the airlines have either announced or have indicated that they will offer  seats at lower rates to attract customers in lean season. In fact other airlines like GoAir, SpiceJet   and even bigger rival Jet Air on and off announce special discounts on limited seats on first come first serve basis just to fill seats which are unlikely to get takers in lean season.

Customers often have a complain that the seat they had desired to book ifs already sold because of limited availability. This is because airlines have hardly 10% seats to offer in such schemes and on metro routes the precentage of seats on sale shrinks further.

These offers can be considered an eyewash because, say industry watchers as there are hardly a  few seats at that price especially on heavy density routes like a Mumbai-Delhi or Delhi-Kolkata route.

Once bitten, twice shy:  The sector has gone through the phase of fare war two years ago and hurt itself brutally in terms of yields and revenues. Now, can one expect a grand sale for masses when all airlines are in red?