Air fare in India dips as price war begins

Air travel in India no longer seems to be the monopoly of the rich.

A price war has broken out in the Indian civil aviation sector as two big private airlines brought down air ticket prices almost equal to the second class air-conditioned railway fare.

Private Airline Jet Airways and Air Sahara announced a cut in fares on busy revenue-churning routes between metropolitan cities Delhi, Mumbai, Kolkata and Bangalore.

A return fare between Delhi and Mumbai has been reduced to Rs 4,444 (about 96.5 dollars), compared to Rs 4,420 for second class air-condition rail coach fare between the two biggest cities of India.

The rock bottom prices of the air tickets of the two airlines are, however, subject to being bought at least 30 days in advance.

Within days of Sahara announcing the lower fare structure, Jet Airways came out with a slew of incentives, including a monsoon package, special point-to-point fares, return excursion fares and promotional fares.

Jet Airways is also offering attractive travel schemes providing substantial savings over normal fares under its special monsoon point-to-point and return excursion fare in economy class. This scheme will remain valid between July 26 and October 15 this year.

The decisions by Sahara and Jet came close on the heels of state-owned Indian Airlines' announcement that a passenger flying between two metros need to pay only an extra of Rs 1,000 to take a connecting flight to a smaller city.

According to civil aviation industry sources, the major reason for the price cut is that the time between July and middle of October witnesses a sharp fall in demand for air travel. Hence, the price war and cut-throat competition to attract travelers.

Besides price war among major private and public sector airlines, air travel in India is likely to be easier and in the reach of middle class in the next few months if the proposed launch of low-cost no-frill carriers are implemented.

At least nine companies are planning to introduce low-cost airlines and have applied for license. The country's first low-cost airline -Air Deccan- offers tickets nearly 30 percent cheaper than market rates. The company has already announced a scheme that will cut air fare down to Rs 500 to 700 on flights between major metros.

Bangalore-based liquor baron Vijay Mallya's United Breweries has signed an agreement with European aircraft manufacturer Airbus for purchase of four planes for 240-250 million dollars to launch its fleet of Kingfisher Airline named after is popular beer brand.

The low-cost airlines are planning to sustain themselves by cutting overhead expenditures by dispensing with sale agents and switching to e-booking, serving sparse meals and packing more seats inside the aircraft.

Indian air travel fare has remained higher compared to in many other parts of the world because of high operating cost such as landing and parking fees. In fact, low cost airlines is going to be a big challenge given the fact that a number of new airlines in the normal aviation business for one decade have closed shops.