Airlines cut surcharges to spur summer demand

Low-cost carriers SpiceJet and Indigo effected a cut last week, while Jet Airways and national carrier Air India followed this week. Industry sources said Kingfisher was evaluating a similar move from April.
Both SpiceJet and IndiGo have introduced an all-inclusive advance booking fare of Rs 1,722 for short-haul sectors, while the fare for long-haul sectors stands at Rs 2,700. Normally, the fuel surcharge for short-haul sectors itself is Rs 1,950, while the surcharge for the long-haul sectors is Rs 2,700.
This week, Jet Airways introduced advance booking fares starting from Rs 2,071 on all sectors, while its subsidiary and value-carrier, JetLite, introduced fares of Rs 1,722. Air India is offering fares between Rs 1,891 and Rs 2,611, inclusive of taxes and surcharges.
Most fares offered by carriers are valid for the entire summer season. However, like other special fares, airline executives admitted that only a limited inventory would be available in this case too.
“We have ten classes or buckets in our domestic flights. If our lowest bucket is selling well, we go to the next bucket, and so on,” said an Air India executive.
Airline executives said the increase in the number of passengers would not make up for the cut in fares.
“The fare cut we are going in for is just one airline reacting to the other. It may not lead to larger volumes,” said an airline executive.
Travel company executives said the results had started to show. “We have had a 20 per cent increase in bookings in the last three days and the increase has come solely from advance bookings. Apart from starting to stimulate the market, the move has also increased advance bookings, which is good news,” said Mohit Srivastava, head of online sales, Makemytrip.com.
Business Standard