ArpitGarg's Weblog

An opinion of the world around me

Predatory pricing of Airlines

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Almost all Indian airlines are running into huge losses. This begs a question, “Why do they operate at all? Why not shut down altogether?” The answer lies in getting funding and tapping potential future market.

With absurdly low fares (less than even bus/train fare) how can the airlines survive? Should they keep living the life of attrition till they go bankrupt and eventually shut down? This ridiculous pricing is one of the major reasons for their current state.

I feel the Time for airlines has not yet arrived in India. The current crop of airlines will keep on bleeding till the air traffic increases leaps and bounds and the fares stabilize. When this will happen in a country like India is a question to answer.

When customers regale in 500/- pricing, what they don’t realize is the hidden cost. Such pricing aims to give the common man a taste of air travel, and hopes that he gets addicted to it. So when the fares become higher eventually, he will have no option but to choose air travel.

Given the bleeding Air India, Defunct Kingfisher Airlines, Struggling Jet-Airway and On ventilator SpiceJet, I strongly believe it is not the right way. Airlines eventually default on bank loans/government help, burden of which indirectly falls on the same traveler.

I think DGCA should come up with minimum airfare policy which the airlines need to follow. This minimum airfare should compensate the cost to the airline for a single trip. The fuel cost, airport charges, salaries and aircraft maintenance charges among others. This will result in the real foot-fall and not the created surge. Airlines will grow according to this real market.

The predatory pricing has to go if air industry needs to survive.

Written by arpitgarg

September 5, 2014 at 5:31 pm

Posted in General/Society

Tagged with , , , ,

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