Tuesday, August 31, 2010

GoAir Blasts Air India Fare Scheme

AWIN First Aug 30 , 2010
Neelam Mathews

Mumbai-based GoAir says Air India’s plans to reduce fares in September when the tourist season starts is counterproductive.

“We don’t see (need) for Air India to reduce prices. We hope they realize this is not the right move. We will also have to pull down fares ... everybody will bleed ... unfortunate,” said GoAir CEO Kaushik Khona. The budget airline has eight Airbus A320s and plans to add two more by October. GoAir’s load factors were down in July and August, which are low peak months, said Khona.

Air India is expected to reduce fares by about 10%, which many say might lead to a fare-war in a debt-laden industry that had just begun to pick up yields.

However, Air India has been historically competitive in its fares. “It is a smart move [by Air India] to garner market share in the leisure market. Indians traditionally book holidays in advance for the last quarter of the year and Air India is tapping that market,” says Ratan Shrivastava, director and head of Aerospace & Defense at Frost & Sullivan.

GoAir is adding four new destinations, with a focus on North India, with almost one-third of its flights originating from Delhi.

The carrier is in talks with Airbus to prepone its deliveries from 2014 for 10 A320s to March 2013. “It is good we placed an order with Airbus earlier as there is a backlog of orders with Airbus,” says Khona. “We would like to expand faster, start more destinations, but don’t have enough aircraft.” He went on to say that taking on smaller aircraft to allow it to more rapidly expand is “still under evaluation.”

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