Air India abandons cut-throat pricing
06 Dec 2011
New Delhi: Providing some relief to private carriers, state-run Air India Ltd has raised airfares over the past one month abandoning a strategy of cut-throat pricing that was badly affecting the industry.
State owned Air India has now increased fares and keeps them at around Rs150 more than that of low-fare carriers on key sectors, according to industry sources.
India's three largest private carriers, Jet Airways (India) Ltd, Kingfisher Airlines Ltd and SpiceJet Ltd lost a combined Rs1,500 crore in the quarter ended 30 September for a number of reasons, including competitive pricing.
Air India's pricing policy resulted in airlines, including the state-owned carrier, not even recovering fuel costs on some sectors for services operated by them.
Recently, the airlines sought the prime minister's intervention to help them out of an industry-wide crisis fuelled by high jet fuel prices, airport charges and uneconomic fare levels.
These factors were stated in an 18 November letter addressed to the prime minister.
Air India currently commands a market share of about 17%.
