Air India's move to lower fares by up to 20% on certain routes since January this year to increase its falling market share is making other airlines see red as they face the prospect of taking a hit on their profits as per a report in TOI.
Airlines are worried that the national carrier's dash for market share has come at a time when oil prices have risen to record highs due to the Libyan crisis, raising their operational costs as much as 50% in some cases.
Despite having the largest fleet, Air India was recently overtaken by low-cost airline IndiGo in terms of market share. The national carrier has a market share of 15%. It has long lagged behind Jet and Kingfisher, the two large sector airlines. Air India's move has had some impact in January-March 2011 quarter, say analysts.
"Air India has dropped fares in the last quarter by 20%-30%. This forced other airlines to follow suit. With fuel costs up by more than 40%, this drop in fares by Air India has become a game changer for the fourth quarter of the last financial year," said Kapil Kaul, CEO, (Indian sub-continent & Middle East), CAPA.
» Read Complete News.....(You need to login first to read complete news). New User? Register for FREE!
» Back to Travel News