rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Flip-flop: Low-cost airlines raise fares once again

Flip-flop: Low-cost airlines raise fares once again

February 20, 2009 10:30 IST

Mocking air travellers across the country, low-cost carriers on Thursday raised fares back to last week's levels after reducing these by 20 per cent on Wednesday.

Industry sources and certain airline executives revealed this was done after the LCCs hammered out their differences with full-service carriers on certain contentious issues related to pricing.

Last week, all airlines -- whether LCCs or full-service carriers -- had increased fares by a staggering 100 per cent. On Wednesday, only the LCCs had reduced the fares. While CEOs of the LCCs remained unavailable for comment and did not reply to SMSes, industry sources said the fares had been lowered as a protest against the full-service carriers' sale of coupons worth Rs 300 crore (Rs 3 billion). These coupons, which are valid for six months, were sold to travel agents across the country at prices which were 20-30 per cent lower than those available on their websites.

The coupons were sold just a few days before the LCCs and full-service carriers both increased their fares by nearly 100 per cent. The coupons' worth was 5-6 per cent of their usual monthly domestic sales and partly made up for the loss in passengers as a result of the price increase. The sale of these coupons would have also snatched a large part of the market away from the LCCs, which had increased prices.

"The LCCs wanted to show that if FSCs could sell cheaper coupons on the sly after agreeing to hike prices, they could decrease prices as well. But, apparently, some settlement was reached yesterday in which full-service carriers have said they will not sell coupons anymore, after which LCCs pulled prices back to the high levels," said a source closely associated with the development, who did not want to identified.

"You must expect more fluctuations of this kind in the future. The bottomline is that tickets are not selling and airlines are desperate for sales before the end of February, which is anyway shorter than the rest," he added.

Travel company executives said while the price increase was too sudden to register customer attention, bookings had marginally improved last night and the numbers were looking good this Thursday morning.

"The airlines are just playing with the public and getting away with it," said Keyur Joshi, COO of travel portal Makemytrip.com.
Anirban Chowdhury in New Delhi
Source: