State carrier slashes fares by 20-30%, giving competition to private carriers with plans to hike ticket prices as the Gulf unrest has shot up oil prices
State carrier slashes fares by 20-30%, giving competition to private carriers with plans to hike ticket prices as the Gulf unrest has u00a0shot up oil prices
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Civil Aviation Minister Vayalar Ravi, after assuming office, had clearly said that his priority would be to bring back the glories of Air India by making it a profitable venture. And three months into the job, he has set the wheels in motion to revive the debt-ridden Maharaja's glory.
Air India's move to slash fares has upset the plans of other airlines that wanted to hike fares to cope with the expensive fuel
A major step taken by the airline, at the minister's recommendation, is making the fares market-friendly, which never existed earlier.
To curb losses for the past 10 years, the fares of the state carrier have been lowered by 20-30 per cent on certain routes. This when other airlines are working out strategies to increase fares, owing to the climbing crude oil prices because of political unrest in the oil-rich Gulf.
"It will not be appropriate to say that we are offering discounted fares. Rather, we have made the fares competitive, unlike before, to operate in a competitive market," said Kamaljit Rattan, chief information officer, Air India, adding, "With the new fares, the ticket sales have surged. We are expecting a good growth in the coming days."
The carrier's move has upset the plans of other airlines that wanted to hike fares to cope with the expensive fuel. A senior official from a low cost airline said on condition of anonymity, "The new Air India fares are a big challenge for us as crude oil prices have gone up.
All the airlines, including us, want to increase fares to avoid losses. We had earlier thought of increasing the fare, but with AI's move, will now wait for sometime."
'Good move'
Travel agencies term the airline's move as competent, saying that the new fares have fuelled demand, raking in revenue for the ailing carrier.
"With the new fares, the sale of Air India tickets has gone up in the past few weeks. Especially if you look at the Mumbai-Delhi sector, the fares are competing with all other airlines, on some sectors they are cheaper than those offered by others," said Devang Sanghvi of Venus Holidays.
Expertspeak
Experts suggest that, apart from lowering fares, coordination with the employees will make things better for the Maharaja, continually surrounded by complaints from dissatisfied employees and other controversies.
Captain Mohan Ranganathan, an aviation expert, said, "It's a good move. But any airline can only win the trust of passengers with better services and fares.
u00a0
The former is the job of employees and till date there is a lot of discrimination between them and the management.
Even if the minister makes a new policy, it is the management that is going to implement it. So there is a need for good coordination between them, which is not happening."
Long-term loans
Sources from Air India revealed that the airline is in talks with banks to convert the loans it had taken (amounting to about Rs 40,000 crore) into long-term loans, which again will be a big relief for it.
"The banks are working on a proposal to convert the existing loan into a long-term loan. It will be a big relief for us as we will get time to think about other developmental aspects," said a civil aviation ministry official.
Hard facts
Despite having the largest fleet of more than a hundred aircraft, Air India has always been overtaken by low cost airlines like Indigo and others in terms of market share. The Maharahja has, this year, slipped to the fourth position in national airline rankings, with a market share of 15 per cent. The losses it suffered in the past three fiscals are:
Rs 40,000 cru00a0loss incurred by Air India till date
Rs 7,189 cr loss incurred by Air India in 2008-2009
Rs 5,551 cru00a0loss incurred by Air India in 2009-2010
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