 "Copy cat: Is Jet's flash sale an attempt to generate quick working capital?")
A day after Jet Airways’ Chairman Naresh Goyal assured investors of doing everything it takes to pare the ailing airline’s massive debt, restructure operations and get it back to profitability, the airline followed domestic low cost carrier (LCC) competitors by announcing a flash sale.
Though the sale is valid on flights both international and domestic and on flights of Jet’s equity partner Etihad Airways too, one wonders why Jet is going out on a limb to compete with domestic LCCs like SpiceJet and IndiGo which announced a flash sale earlier this week. Specially since Goyal and CEO designate Cramer Ball made it very clear that confusion over brands and pricing models in the domestic market will have to be cleared.
By following LCC competitors in the domestic market, is Jet conveying its intention to focus on the LCC model exclusively? Right now, it operates some flights as full service, some on LCC model under different brand names. It is not clear if Jet’s domestic competitor Air India will follow in its footsteps.
So travellers on economy and business class of Jet and Etihad Airways can get upto 50 percent flat discount over regular fares on the combined network of the two airlines across over 135 destinations worldwide. But unlike the all-inclusive fares announced by LCCs in their respective sales, the Jet sale covers only base fare and fuel surcharge for domestic flights while for international flights, the discount is only on base fare.
The 72-hour fare offer will be available from 25 July to 27 July, with travel effective from September one till 15 June, 2015 for flights within India and from 1 September till 30 November, 2014 for flights to international destinations. This offer will be limited for tickets purchased in India and for travel in Business and Economy classes of both the airlines. So the sale is for nine long months on domestic flights but only for two months for international ones; deeper discounts are available on domestic flights.
Domestic operations account for 55 percent of Jet’s revenues and have been dragging down the airline’s profitability since it claims the international operations have already turned profitable. Ball was quite candid when he said in the same press meet yesterday that the domestic business needs massive restructuring and his motto would be to “keep things simple”.
An official at a large travel website said such flash sales are now becoming common for airlines who want to sell inventory in advance and generate much needed working capital.
She said Jet’s sale seems to follow that announced recently by SpiceJet and IndiGo. “People start booking for dates where travel not planned on such sales and airlines earn a lot on cancellations this way. SpiceJet’s losses have been spurring it to sell inventory as fast as possible,” this executive said.
Last week, SpiceJet offered up to 50 percent discount for bookings till 30 June, for travel between 1 September and 15 December, to fill seats during the peak travel season. IndiGo followed soon after. SpiceJet is offering fares starting at Rs 1,999 all inclusive.