BackSpiceJet unleashes fare war with cheaper tickets
Prices cut by more than half for travel between February and April in a move that forced IndiGo, GoAir to follow suit
Premium(Priyanka Parashar/Mint)
New Delhi: SpiceJet Ltd, India’s second largest budget airline, on Friday cut ticket prices by more than half for travel between February and April in a move that forced its rivals to follow suit.
IndiGo, run by InterGlobe Aviation Pvt. Ltd and the country’s largest low-fare airline, and Go Airlines (India) Ltd’s GoAir reacted to the move announced on Friday morning by matching the fare cuts. IndiGo, however, seemed to have rolled back the sale by the evening.
The February-April period is considered the leanest for Indian airlines as travel demand drops.
SpiceJet said it was offering one million seats at an all-inclusive fare of ₹ 2,013 for any domestic flight between 1 February and 30 April booked till 13 January.
The airfare for a Delhi-Mumbai flight, if booked on the day before travel, typically costs ₹ 8,419, and for those booked a fortnight in advance about ₹ 4,700.
The response to the SpiceJet sale was so high that some online travel agencies such as Makemytrip.com removed the airline from their search engines. Customers who tried to make bookings on the SpiceJet website found that the heavy traffic caused it to hang frequently.
“We have 1.7 lakh seats booked today up till 5 o’clock," said Neil Mills, SpiceJet’s chief executive officer, adding the airline typically books 40,000 seats on a normal day.
Mills said the airline’s website had not crashed, but was queuing requests as the numbers had gone up significantly.
“Their servers have melted, not mine," he said, referring to why fares were not available on travel portals by afternoon.
IndiGo seemed to have followed suit early on Friday. Many of the tickets on its website were marked with a “sale" tag with tickets going for ₹ 2,010, matching SpiceJet’s offer. By evening, GoAir was selling seats at ₹ 2,007 for the same Delhi-Mumbai sector in March.
By late evening though, IndiGo seemed to have removed the sale tags from its website, while JetKonnect, the low-fare arm of Jet Airways (India) Ltd, said it was selling seats for ₹ 2,057, but a search of its website could not find such prices on offer.
“IndiGo fares are as per the market requirement and will continue to offer low fares—consistently," an IndiGo spokesperson said.
A Jet Airways spokesperson did not offer any comment.
Airlines have refrained from giving such heavy discounts on tickets in the least few months as Kingfisher Airlines Ltd’s exit has meant seats were in short supply, said a senior airline executive who declined to be named.
“This is a sale after a long time in the Indian market. The last one was also by SpiceJet on its anniversary on 23 May," this executive said. “March will have the maximum seat availability for such discounted seats, with Tuesdays and weekends being the best days to getting the deal."
Air India Ltd said such a cheap sale will hit the industry.
“Air India is watching the situation carefully, where the industry is shooting itself in the foot. And until Air India is compelled by the competition into doing so, it would prefer not to jump into the game," said an Air India official who declined to be named. “These people are suicidal. Taking people to Madras (Chennai) in ₹ 900 is plain suicidal. It does not even cover your fuel cost."
Mills said he is not concerned.
“We have shaken the market, which is fine. But we are selling capacity which we had not expected to sell. We are selling only 10 lakh of the 50 lakh seats for the period between February-April," he said, adding that there would be only a positive impact on the SpiceJet balance sheet, “Yes, other competitors would be uncomfortable with what we have done, but so what?"
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