Airlines start 'jaldi-jaldi' scheme to return to price war

“Jaldi Jaldi”, the name of the new discount scheme from state-run Air India, is suggestive–it is also a reference to the price war, which the scheme has kicked off in the sector.

Airlines are struggling, with declining passenger traffic and rising fuel prices that account for about 40 percent of their operating costs. Two of the listed companies just about managed a turnaround in April-June.Nothing has changed in the sector fundamentally, to start an undercutting.

But, Air India and Jet Airways are offering discounts on tickets booked a month in advance.Indigo has joined the battle for market share. With other low-cost carriers following, the price war is now full blown.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

According to a report in the _Business Standard,_low-cost carriers have slashed prices by 5-20 percent ahead of the festival season - the October-November period, which contributes 25 percent of the total aviation customer base, starting Dussehra.

The fare battle has begun to induce passenger demand which has slowed in recent quarters due to the high air fares this year.

[caption id=“attachment_468778” align=“alignleft” width=“380”]  The fare battle has begun to induce passenger demand which has slowed in recent quarters due to the high air fares this year. Reuters[/caption]

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

Air India is offering passengers up to 40% discount on various routes. Jet Airways came up with similar schemes a day later. An Economic Times report says IndiGo is offering return fares of Rs 9,591 on Delhi-Mumbai, Rs 10,202 for Delhi-Bangalore, Rs 9,954 for Delhi-Hyderabad, Rs 9,425 for Delhi-Kolkata, Rs 9,950 for Delhi-Chennai. SpiceJet and GoAir have also cut fares by five to 20 percent to spur demand too.

But discounting fares in an already depressed market when costs are rising will hit the financials of the loss-making airlines even further. Irrational taxation of fuel and high airport levies are increasing the operating costs of airlines. India currently has one of the highest operating cost environments for airlines anywhere in the world. As Firstpost argued earlier, “India might have airlines offering cheap tickets, but there is nothing low cost about operating an airline in India.”

Already burdened with years of accumulated losses, the private airlines are battling for survival, and weaker ones like Kingfisher is almost out of business while Air-India - the most indebted of all - is kept aloft only by government funds.

Secondly, this aggressive pricing strategy adopted by the airlines will only make matters worse because the operating landscape has not changed and more discounts could increase competition and reverse the benefits of the current consolidation.When fuel is at a peak, pricing is nearly below cost, the damage on the balance sheet is going to be significant.

As long as airlines continue to gasp financially, they will find it difficult to make investments in safety equipment and procedures, as well as train more crew.