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Foreign carriers tap AI's lost biz, airfares shoot up

Last updated on: May 15, 2012 10:44 IST

Foreign carriers tap AI's lost biz, airfares shoot up

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Mihir Mishra and Aneesh Phadnis in New Delhi/Mumbai



A
ir India's woes translate into good news for competing international carriers. With the state-owned airline forced to cancel flights because of a pilots' agitation, fares in the international sector have shot up.

The average fare rise has been 20 per cent and several passengers are finding it difficult to get a seat.

"Air India has cancelled flights on international routes to Europe and the US and short-haul routes to Hong Kong and Singapore. With the cancellations, fares have increased 20 per cent.

Owing to a demand-supply mismatch, all the airlines are seeing an increase in revenues," said Siddharth Mehta, who heads the air product vertical at Makemytrip.com, the country's largest online travel portal.

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Image: A fuel tanker moves past Air India passenger jets.
Photographs: Rupak De Chowdhuri/Reuters

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Mehta says international carriers will be the main beneficiaries because of their larger numbers. "Jet Airways is the only Indian carrier that has a strong presence in the international sector. So, foreign carriers will gain the most from Air India's flight cancellations," he adds.

Air India is the largest Indian carrier in the international sector (flights to and from India) in terms of passenger carriage.

It commands 20 per cent market share in the sector and offers nearly 50 per cent of total seats offered by Indian carriers in the sector. Indian carriers flying abroad offer 200,000 seats a week. Of that, around 100,000 seats are offered by the state carrier.

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Image: Ground staff guide a Jet Airways aircraft towards a gate on the tarmac at Bengaluru International Airport.
Photographs: Rupak De Chowdhuri/Reuters

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International carriers, on the other hand, offer 340,000 seats a week. The situation could worsen once the airline implements its policy to cut the number of flights to Europe and the US dramatically from 34 flights a day to only 14.

A lot of group tickets are also booked on Air India, which have been cancelled as flights did not take off. "Seats are not easily available on flights to London, Europe and the US and those available are at higher fares.

Those who have booked group tickets on Air India are also facing problems.

These are discounted tickets and now with Air India flights cancelled they have to book on other airlines and tour costs are rising," said Pradip Lulla, ex-president, Travel Agents Federation of India.

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Photographs: Reuters

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Lulla says the cheapest return ticket on the Mumbai-London route was available at Rs 40,000-44,000 but it had gone up to Rs 50,000-55,000.

The long-haul international sector to the US is impacted the most as Air India is the only carrier, apart from US-based United, that offers direct flights. All others offer connectivity through their hubs.

Jet Airways also offers connectivity to the US through its hub in Brussels. For instance, while the minimum return fare between Mumbai and Newark was around Rs 90,000 before the agitation, it has now hit Rs 107,000.

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Image: Air India's Airbus A321 (L) and Boeing 777-200 LR aircraft.
Photographs: Punit Paranjpe/Reuters

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Rajji Rai, ex-president of Travel Agents Association of India, says, "Air India is the only Indian carrier that offers direct flights to the US and Canada and people prefer it. In case of its cancellation, a different set of problems emerges."

Mehta feels the problem will continue even after the strike is called off.

"The strike happened in peak season. Even after the strike gets called off, the airline will take a lot of time to normalise operations, as it will have to clear the backlog," says Mehta.

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Photographs: Punit Paranjpe/Reuters

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COSTLY FLYING
Current return economy class fares on select routes

Mumbai-London: Rs 69,000-Rs 78,000; available fare pre-strike Rs 50,000.

Mumbai-Bangkok: Rs 21,000-Rs 31,000; available fares pre-strike Rs 18,000-Rs 20,000

Mumbai-Newark: Rs 1.09 lakh; available fare pre-strike Rs 90,000


Photographs: Punit Paranjpe/Reuters

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