Vistara heats up the airfare war

A day after launch as a premium airline, Vistara is offering fares cheaper than rivals Jet Airways and Air India, and in some cases budget carrier IndiGo, raising the spectre of a fare war.

Vistara has the most attractive fare on the Delhi-Mumbai route for Monday.

At Rs 9,175, Vistara’s 7.25 am flight is cheaper than IndiGo’s 7.30 am flight, which has seats for Rs 13,037, while Air India and Jet Airways are charging about Rs 1,000 more.

In the evening, Vistara’s 7.55 pm flight is cheaper than Jet Airways’ 7.20 pm flight, and only a few rupees more than Air India’s 8 pm flight.

Data from travel portal MakeMyTrip and airline websites show Vistara tickets on Mumbai-Ahmedabad for Monday are for Rs 3,795, the cheapest on offer.

IndiGo’s lowest price is Rs 4,400, Jet Airways Rs 5,658 and Air India Rs 7,148.

Vistara’s fares on the Mumbai-Ahmedabad route throughout next week are Rs 3,795, which is higher than Jet Airways’ fares on six days out of seven.

Air India’s fares are higher on four days and IndiGo is priced lower than Vistara on almost all days.

Asked whether Vistara had dropped fares, Giam Ming Toh, chief commercial officer of the Tata-Singapore Airlines joint venture, said, “We started bookings 20 days ago and based on the trends we have to make minor adjustments here and there.

Fixing fares is a complex and dynamic exercise and you might have just seen one snapshot.

There could be others, too.” Vistara is not offering regular commissions to agents. It has offered a three per cent productivity linked bonus to agents on meeting sales targets.

Air India and Jet Airways pay a one per cent commission to agents and offer bonus only for international flights.

“Vistara has three planes and is flying only on three routes. Right now it is not a competitor to other airlines. It will develop the network once it adds aircraft,” said a Mumbai-based travel agent.

“We were expecting Vistara would not play the fare game. But now we have decided to readjust our fares downwards,” said a senior executive with a budget airline who did not wish to be named.

When Vistara started accepting bookings on December 20, its cheapest economy-class ticket was priced over Rs 7,500 when rivals, including budget airlines were selling at around Rs 5,000.

In fact, its economy-class fares were about 15 per cent higher than other full service airlines. On January 20, however, Vistara’s evening flight at 7.55 pm is cheaper than Air India’s (which flies at 8pm), and even IndiGo’s (which flies at 7.25 pm) and marginally higher than Jet Airways’.

On the same day, its morning flight at 7.25 am is again cheaper than Jet Airways’ and Air India’s. But IndiGo has adjusted by dropping its fare to below Rs 5,000.