SpiceJet hints at fare hike
29 Jan 2009
Low-cost airlines might soon not be all that cheap, according to indications by the newly appointed chief executive officer of SpiceJet, Sanjay Aggarwal, who told a business paper that domestic air fares will soon bounce back.
"They (fares) will change and in the next two to four weeks if not sooner.
It is difficult to say whether they will go up 20 or 30 per cent because there is competitive pressure. I think fares will stabilise in the low Rs3,000 range from the current Rs2,000 levels," Aggarwal said.
Officials said that the airline had not seen an increase in demand to correspond with the low fares being currently offered. Asked whether SpiceJet would take the lead in increasing fares, Aggarwal said, "I would not comment on our future pricing policy. We will do whatever is required to protect our business plan. We are here to sustain power. We will play it out to protect our revenue numbers."
Currently, passengers can get various low fare options on all the airlines. Not only have the airlines cut fares in the recent months, but they are also offering incentives such as free travel for spouses of business class passengers, and offers like tickets 'for free' or 'for Re 1'. The passengers, however, have to pay surcharges, which take the minimum cost of a journey between Delhi and Chennai to Rs2,975.
Other airlines are not yet commenting, although when one airline increases fares the others usually follow suit. A spokesman for Kingfisher Airlines said that there was "no move" to raise fares just yet.
Industry watchers felt that the airlines will have to take a look at the passenger loads being carried before taking a decision on the fares to be charged in the weeks ahead.
The industry recorded a close to five per cent decline in passengers carried by the domestic airlines during the 2008. In contrast, the industry recorded growth of 46.5 per cent and 32.5 per cent during the calendar years 2006 and 2007.
