Home > Business > Special
Fly now! International airfares plummet!
Sangeeta Singh & Samyukta Bhowmick in New Delhi |
March 05, 2005
Airfares are dropping at breakneck speed all over the country. It has come to such a stage that you can actually fly to London and come back for less than Rs 20,000.
Not that much less (Air-India has offered a fare of Rs 19,900), but still less -- something that would have been unthinkable a mere year ago. And experts say that we ain't seen nothing yet.
Even British Airways, one of the oldest names in the business, has been forced to drop its prices quite a long way to keep up.
You can fly to New York for Rs 36,440 (all prices are exclusive of taxes), and to London for Rs 26,500 with British Airways, prices that are almost shockingly competitive.
Fare to New York
Fare to London
KLM Royal Dutch
Kuwait Airways, which is not top on anyone's list of favourite airlines, but which most still grudginly admit is good value for money, is offering a more expensive rate to New York (Rs 37,500), and one that is only marginally lower to London (Rs 25,100).
So why are fares dropping like this? According to some, it's simple supply and demand.
"The fact that domestic carriers such as Jet Airways and Air Sahara will be able to fly to international destinations is one major factor that is affecting prices. And since Air-India is already flying to London at a price of Rs 19,900, to compete, Jet will have to introduce a fare of at least Rs 17,000, maybe even lower," says Vineet Sethi, head-sales and marketing for Delhi and Gurgaon, Cox and King's, hinting at one of the reasons prices may plummet even further.
Air-India's Jitendra Bhargava agrees that it's simple economics: "It's supply and demand. It's off-peak season just now, and since we are the national carrier we thought it neccessary to offer attractive prices to fill capacity and create demand."
Air-India is flying to New York for Rs 39,990, and London (we have to keep mentioning this because we don't quite believe it) for Rs 19,900.
Although increased supply (in the form of more carriers) and reduced demand (since it is not peak season), is clearly playing a part in the fantastic fares we're enjoying, it seems as though the story goes deeper.
Cheaper air travel is being institutionalised here in India, as the government's recent open skies policy shows. Civil Aviation Minister Praful Patel has also intimated that India may start talks with countries in Europe and the Far East (it has already signed treaties with the US and UK) to discuss bilateral air traffic rights and further liberalise the sector, which can only mean increased capacity and a further lowering of prices.
Globally, another change that is making itself felt is the advent of the Internet. Many are waking up to the fact that they can get cheap air tickets online, either straight from the airline or from companies that buy in bulk and sell at competitive rates.
The Guardian reported in January that independent holidays (those not booked through agents) had jumped from £5.5 billion in 1998 to £11.7 billion last year. However, industry watchers say that this is not a trend that has picked up in India -- perhaps because of the lack of such Web sites.
There are other reasons though, why this trend isn't picking up, as Sethi points out, "Although there is a trend of people buying tickets online, the middleman can never be completely eliminated for a variety of reasons," he says.
"Schemes where airlines sell directly always have some hidden catch, for example, Singapore Airlines introduced a very low fare of Rs 13,000 on its flights to London, but there were only five seats available on this scheme on every flight. And businessmen, who travel frequently, also need travel agents to secure them the deals they wouldn't otherwise get if they bought the tickets themselves."
Although it is to be expected that prices will be low in this season, with the exams also coming up, putting a large damper on family holidays, and prices are expected to go up when the summer rolls around, they will still probably settle at a lower level than before.
According to Ashok Fenn, president and CEO, Interglobe Air Transport, "Competitive rates and high traffic are here to stay. There is a lot of latent capacity and traffic will keep creating as prices remain competitive. Margins definitely are under pressure but airlines are increasing volumes to compensate."
Increased volumes mean increased choice, both for high- and low-end consumers, as Fenn points out, "A passenger from Amritsar will not mind taking a Delhi-Tashkent-London flight as long as he reaches London, but for those who believe that time is money will rather fly non-stop. Lufthansa, for instance, has just started a Hyderabad-Frankfurt flight and Emirates has a 14-hour flight to New York with a short break in Dubai."
This is not all that Emirates is offering: it has introduced a record low economy air fare from Mumbai to New York of Rs 38,000 (it's Rs 45,200 if you're flying from Delhi, Hyderabad, Cochin or Chennai), which includes a free hotel room in Dubai.
Similarly, Royal Jordanian has flights to Philadelphia and New York with a free one night stay in Amman.
So now that the skies have been opened up, we in India can finally sit back and let the airlines fight over us.
All that is left now is to pick where you want to go -- and, of course, hope that somewhere along the line, while airline presidents and CEOs have been plotting over how to cut out their competition by slashing fares, someone will have remembered to suggest better food as well.