Logistics

Low-cost carriers flying abroad may eat into full-service carriers' share

Debabrata Das Vishwanath Kulkarni Mumbai/New Delhi | Updated on June 22, 2011

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With the competition heating up among low-cost carriers plying in the medium-haul international routes, market shares of full service carriers on the same routes are set to take a dent.

Return airfares to medium-haul destinations like Singapore, Bangkok, Dubai and other such destinations close to India range anywhere between Rs 18,000 and Rs 24,000 on full service carriers.

However, low-cost carriers like AirAsia, Fly Dubai, AirArabia and the newest entrant IndiGo, have slashed return fares on such international destinations to the tune of Rs 10,000-15,000.

“Definitely the market share of full service carriers will be under threat. Increasingly, travellers are preferring to go with low-cost carriers when they can. Medium-haul routes are 3.5 hours to 5 hours and for such short flights people will definitely chose a value for money option as a lot of travellers on such routes are private tourists,” said Mr Vishwas Udgirkar, Senior Director, Deloitte India.

IndiGo's promotional offer brings down return airfare on international routes to Rs 9,999. However, the offer is only for the only for the first 25,000 seats. It is planning to offer about 1,260 seats every week on each of the international routes.

IndiGo's promo fares are about 30-35 per cent cheaper than the fares charged by other low cost carriers to these destinations and 45-50 per cent cheaper than the full-service carriers.  

Feeling the heat, Malaysian low-cost carrier, AirAsia announced promotional return airfares to Kuala Lumpur, Singapore and Jakarta at approximately Rs 13,000, Rs 16,000 and Rs 18,000 respectively. AirArabia and Fly Dubai meanwhile are offering return tickets to West Asian routes like Dubai and Doha at Rs 12,000-14,000.

Fares would settle at these levels which would put pressure on full-service carriers, according to analysts. Mr Udgirkar said, “Fares would generally settle down to levels between Rs 10,000-15,000. But even at these levels the fares are very attractive as compared to full services carriers.”

Published on June 22, 2011

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