The Rs990 fare announced by AirAsia India on Friday has forced other airlines to climb the bandwagon. In fact, IndiGo, the biggest carrier in terms of the number of passengers carried, has not only matched the fares but also announced an amount slightly lesser than what AirAsia is offering on the Bangalore-Chennai route.
IndiGo's official Twitter account on Saturday tweeted: "The number 1 airline brings you the lowest of low fares. Fly from BLR to MAA & GOI for just Re1! Taxes Extra."
It is offering a fare of Rs937 between Bangalore and Chennai for travel beyond June 12 on certain days. SpiceJet, the second largest low cost carrier, isn't as generous at Rs 2,058 on the same route.
Experts, however, are sceptical. They feel that though it is a good opportunity for passengers, airlines which are already under tremendous financial pressure should be charging normal fares to maintain financial viability.
"The war in Indian skies has just become more intense, as expected. Indian passengers should make the most of the deeply discounted fares while it lasts. However, once the din dies out, airfares need to be hiked in proportion to the high operating costs in India, or else, the financial distress in the sector may prolong. We may see losses worsening, leading to the exit of one or two players in the next 12-18 months," said Amber Dubey, partner and India head of aerospace and defense at global consultancy, KPMG.
Fare discounts have become routine in the last 5 months, with Indian carriers battling to increase advance bookings in order to compete with AirAsia India. SpiceJet had to discontinue its Re1 scheme after Directorate General of Civil Aviation (DGCA), the aviation regulator, intervened this April saying that the tariff would have led to distortion in the market. It held that the scheme announced by the airline was against AirCraft Rule 135.
Sanjiv Kapoor, chief operating officer, SpiceJet, said: "As per the letter sent to us by DGCA, the minimum tariff should be Rs1,499 plus taxes. I don't know if that rule has been changed now."
DGCA did not respond to calls and text related to the story.
Industry experts, however, feel that every airline should be given the chance to fix its fares. "DGCA may do well to leave airfares to market forces. There is a Competition Commission of India to address issues of predatory pricing. DGCA should ensure that fare-wars in India do not lead to compromise on safety and security, and focus on ensuring that India gets back its Category 1 status at the earliest," Dubey said.