Airlines Cheap Fares

The Indian airline segment is projected to become the third biggest in the global by 2025, with passengers numbers rising sixfold in the last ten years as a burgeoning centre layer benefits from better connections and cheaper air travel. However, expert warnings against cheap ticketing and excessive dependence on low prices for petrol is unacceptable. India's two leading airlines by franchise, IndiGo and Jet Airways, and the debt-laden state-owned airline Air India are all experiencing difficulties, while SpiceJet's chief executive has said the airline is under " great pressure ".

"Rising Brent propellant levels, falling rupees and a resulting imbalance between high propellant and low fares have negatively affected the airline sector in India, which includes Airways," said Vinay Dube, CEO of Airways this past weekend. They will then have to tax up to 44 percent on kerosene, the highest in Asia according to Bloomberg News, while spending millions on new aircraft to keep pace with passengers' demands.

Jet Airways announced on Monday a 13.23 billion rupee (USD 189 million) deficit for the three month to June 30 term, down from a 535 million rupee gain for the same prior-year quarter. "India's biggest airline challenges are on the costs side, as 60-70 percent of spending is subject to volatility in petroleum rates and foreign exchange markets," Binit Somaia, South Asia Director at the Centre for Aviation (CAPA), told AFP. What's more, the airline's ability to meet these challenges is a major factor in the country's ability to meet its customers' needs.

This year, million of US dollar were deducted from the value of jet shares, and their pecuniary position has been the object of angry speculations in the last few week's news in the country's capital markets. She rejected a July Economic Times article saying she would have to make substantial reductions in costs or cease operation within 60 working days.

However, the airline on Monday heralded with its revenues that it would be implementing a "comprehensive cost-cutting programme" of 20 billion crowns over the next two years and that it would invest to facilitate the turnaround. "Not only can airlines count on low fuel consumption to increase profits, but they can also count on low fuel consumption to help them stay competitive. You have to be prudent about your fares and better at managing costs," said Amrit Pandurangi, an impartial aerospace specialist.

IndiGo earnings in April-June were 97 percent lower than a year earlier, leading to a price slump. Air India, once the country's dominant air carrier and lovingly known as the "Maharaja of Heaven", has been bubbling cash for years and loses some of its shares to cheap competitors. At around 8 billion US dollars, Air India is in the black and recorded a loss of almost 58 billion pounds for the fiscal year ending in March 2017.

Last June she was seeking an emergency 10 billion rupees credit to keep her daily business running, and last weekend saw reports in the news that she was in arrears with payment of loans from banks and had requested a $5 billion rescue. Handfuls of airlines, especially the ephemeral Vijay Mallya's Kingfisher Airlines have gone bankrupt.

Air carriers have to compete in a highly contested environment where a large number of low-cost airlines offer strong rebates to draw travellers. A few pre-tax ticket are as low as 999 crowns. According to an analyst consensus, India's airlines will no longer be able to stop the increasing cost of ownership from being passed on to them. The airlines must increase fares in the next few month to cover the cost, even if it is a consequent crisis for passengers," said Devesh Agarwal, publisher of the Bangalore Aviation website, AFP.

"India's airlines must prevent pricing wars...and form a largely united front to cope with the continuing crisis," Pandurangi said.