Low-cost airlines start holiday bonanza

SpiceJet has dropped fares for the third straight time in the past two months, prompting a price war.

Within hours of SpiceJet’s announcement, IndiGo and GoAir, too, cut fares on some their flights.

Unlike SpiceJet’s earlier offers aimed at boosting occupancy in a lean season, this one is for travel between April and June, during school and college holidays.

The airline said tickets in a three-day sale would be cheaper by three-fourths than the last-minute ones.

Sector sources say a series of discounts from SpiceJet indicates a cash flow problem at the airline.

The company had a loss of Rs 172 crore (Rs 1.72 billion) in the third quarter, usually a good one for airlines.

A large chunk of its loss came from domestic operations.

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“These advance purchase offers are a win-win for customers, airlines, travel industry and the economy overall, as it leads to significant demand stimulation.

"Customers get to enjoy deeply discounted fares, airlines get to reduce waste of seats, and others in the travel eco-system get more business.

"These are not fare wars, as commonly reported, since there are no losers.

"This is just basic customer segmentation and inventory and revenue management,” said SpiceJet Chief Operating Officer Sanjiv Kapoor.

Last month, the airline said such targeted sales do not increase losses as long as inventory and yield are managed properly.

“Flying empty seats around is what increases losses,” SpiceJet had said.

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SpiceJet is cutting flights on a few domestic and international routes and starting a few on others.

The airline has cut down three flights between Mumbai and Delhi.

“We are rationalising via connectivity between Mumbai and Delhi, without affecting the total number of frequencies while offering a better schedule to our customers,” SpiceJet said.

In an earlier statement, the airline had said it was suspending flights to Puducherry, Tiruchirapalli and Allahabad.

“SpiceJet and Indigo are providing discounts on their summer fares to stimulate the market and leverage advance bookings for the coming holiday season.

"SpiceJet has launched a three-day sale, with discounts ranging from 35 per cent to 75 per cent on current fares across sectors between the April 1 and June 30.

"We are already seeing strong demand on the key leisure destinations like Goa, Kerala, etc, and bookings have more than doubled after the announcement.

"We expect other airlines to follow suit, as these prices are sure to strike a chord with the leisure traveller,” said Sharat Dhall, president of Yatra.com.

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According to Neelu Singh, COO, Ezeego1.com, “While most of the metro routes have seen air fares climbing, the summer discounts are attractive for those travelling to tourist destinations such as Goa, Kerala and Rajasthan.”