Home/ Companies / News/  Fares competitive, but not triggering price war: Akasa

Fares offered by Akasa Air are competitive and not leading to a price war, Praveen Iyer, co-founder and chief commercial officer of India’s youngest airline, said.

“Our goal is not to dump capacity and, as a result, dump pricing. Our objective is to be sustainable long-term players. Even the routes we operate are pretty mature and stable, and need capacity. That’s exactly the reason we have managed to hit reasonable load factors in such a short span of time. So, there is no intent to trigger a price war either in action or on paper, absolutely not," he said in an interview.

The withdrawal of fare caps since 31 August led to a significant decline in airfares across routes due to rising competition among airlines to increase passenger share.

Following Akasa Air’s entry into the crowded low-cost carrier space in India, competition has become more intense. It was evident when Akasa Air offered Mumbai-Ahmedabad flight tickets for just 1,400, followed by Go First reducing fares further to 1,000 on the route, which typically ranges between 4,000 and 5,000.

“It is nothing but demand versus supply that determines the price. You make sure you add capacity in the right city pairs where there is demand or lack of supply. When you price where competition is, you do not really trigger price wars but provide customers with a lot of choice," Iyer added.

Competitive airfares impact the yield of airlines. For Akasa, however the approach is about being more customer-focused.

“Fares offered by Akasa are competitive at this point. Sustainability and profitability are very relative terms. We are just a startup, and being a startup, there are many factors that go into being consistently profitable. It is too early for us, and I wouldn’t say we are not focusing on it, but it does not affect or bother us at this stage. Our objective is to make sure we deploy the assets where there is demand and we make sure the customer is happy with the product. We will enhance the customer experience, and that is our primary objective as we expand operations in the domestic market."

Akasa is currently operating 30 flights daily with four aircraft and will add two more on 7 and 21 October. This will take the daily flight count to 44 by the month end. It is also witnessing improving passenger load factor, which stood at 53% in August when it commenced operations. It has ordered 72 Boeing 737-800 MAX planes and aims to have a fleet of 18 aircraft by March 2023.

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Updated: 07 Oct 2022, 06:37 AM IST
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