After telecom space, now airspace hots up as airliners get engaged in fare war

In an attempt to woo flyers, the major constituents of the aviation industry of India-SpiceJet, Indigo and Air India came out with a variety of lucrative offers like 'buy one fly two' including free tickets among others, with the air fares dropping as low as INR 777 in selected routes.

These offers ordain mostly for non-metro cities to encourage more demand in cities like Jammu, Srinagar, Agartala, Guwahati and alike, where the seat occupancy is relatively low. Despite a growth of over 20 per cent in the domestic aviation industry, and reporting profit last year, there are speculations in the industry to revert to the sluggish trends. The restraint on the hike of airfares and the world economic dynamics contributed to the slack.

The current decline in the WTI and brent crude prices of around 0.26 per cent and 1.33 per cent enabled the cut in airfares. On contrary, uncertainity has seeped into the market due to the tiff between the compliance of Oganization of the Petroleum Exporting Countries (OPEC) to cut oil prices and the US crude price rise.


In a forecast by the Coalition of airline pilots associations (CAPA), the Indian aviation industry is expected to make a loss of around USD 350-450 million in FY18, owing to the volatile crude oil prices and a steep hike in the INR-Dollar exchange rate in the upcoming period.

Meanwhile, the aggressive purchasing of airplanes may also intensify the debt and losses of the Indian carriers in the current and the upcoming financial year. The purchase of 880 aircrafts, expected to be delivered over the decade on an estimated cost of $30 billion, it is expected to worsen the problems of the aviation industry.

Thus, expecting lower profits in FY17 and FY18, airlines like Indigo, Jet Airways and Go Air are trying to widen their market base through various discounts and rebates.