Indigo has already announced introductory fares of Rs 999 though the standard fares in the regional routes are at around Rs 3,500
The South bound fliers are in for a good time.
A battle is brewing between rival low-cost carriers SpiceJet and IndiGo which may result in significant drop in fares in the next few months.
While SpiceJet has been a major player on the Southern routes, IndiGo, India's largest airline has lined up plans to intensify operations from December – by increasing frequencies on existing routes and adding new destinations.
The Southern peninsular regions, which includes commercially developed belts, upcoming business centres and pilgrimage destinations, have played a significant role in increasing of yields for SpiceJet, helping it to make a dramatic turnaround in its fortunes from near-closure around three years back. With IndiGo scaling up operations, analysts expects yields of SpiceJet to soften from the fourth quarter of this fiscal.
" In fact, these southern peninsular destinations have been one of the key determinants for higher yields of SpiceJet.With IndiGo starting its regional foray from December, we expect yields of SpiceJet to soften from Q4 of FY18," an ICICI Securities report said.
Yields in aviation parlance refers to the average fare paid per mile travelled.
On IndiGo's plans, ICICI Securities said while most of the destinations are also served by the current A320 fleet, some new cities have been added like Vijayawada, Rajahmundry and Tirupati.
Further, some Tier I cities will also be served by the smaller ATRs to increase their overall utilisation. IndiGo is looking to begin ATR operations between cities on its existing network of Hyderabad, Chennai, Bengaluru, Mangalore, Madurai and Nagpur and two new Tier-II cities of Tirupati and Rajahmundry.
Indigo has already announced introductory fares of Rs 999 though the standard fares in the regional routes are at around Rs 3,500.
Both the no-frill airlines have been trying to outdo each other with claims that their on-time performance (OTP) was better than the other. A few months back IndiGo even made the allegations of SpiceJet manipulating its OTP numbers in connivance with certain staffers from Mumbai's Chhatrapati Shivaji International Airport.
Devesh R Agarwal, an aviation analyst said he broadly agreed with the conclusions of the report, but added that SpiceJet is a well-established competitor with a broad network and a history of aggressive competition.
"As a new operation, with a limited network and with expat pilots, IndiGo will have a cost-base disadvantage, but thanks to its huge cash reserves I expect IndiGo to compete effectively. We must also not overlook the withdrawal of Jet Airways's ATR operations which will keep the demand-supply balance for some time to come."
Iqbal Mulla, chairman of Global Tourism Council said, "The customers will benefit from the competition as it will provide easy commuting between these destinations. Till recently, some of these areas were not connected well with railways and roads. There is a huge demand for the airlines to tap the market."
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" In fact, these southern peninsular destinations have been one of the key determinants for higher yields of SpiceJet.With IndiGo starting its regional foray from December, we expect yields of SpiceJet to soften from Q4 of FY18," an ICICI Securities report said.
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