Indian skies will soon see the flights back in the sky. Recently, Vistara celebrated its 6th birthday with a sale. The aviation industry has been closed since the lockdown induced and has not seen any kind of sales it used to have, before the lockdown.
SpiceJet which is a budget airline provider was the first to sell discounted tickets but had pull the sale back after a rap from the Directorate General of Civil Aviation (DGCA). SpiceJet offered one plus one ticket free. Which meant you could get two tickets for the price of one which was termed a violation of the fare-cap guidelines.
The Tata Group and Singapore Airlines’ jointly owned Vistara were seen smarter in this matter. The sale period—January 8-9— coincided with its anniversary but tickets were for travel beyond the fare-cap period. But the fare-cap period was extended to March 31 and the airline quickly readjusted the dates.
SpiceJet, AirAsia,India and IndiGo announced copycat prices as soon as the sale began.
Indeed “sale” is a mechanism to shore up bookings, fill up seats and get additional cash flow in times of need. A good sale is the one that juggles all three well and not just the flow of cash.
Travel period for discounted tickets for all the three airlines is from April 1 to September 30 whereas the tickets of IndiGo and AirAsia India are offering fares starting at Rs 877 while SpiceJet’s offer is Rs 899.
Flights for Guwahati- Imphal or Agartala-Imphal are the least costly and the floor price set by DGCA starts at Rs 2,000. While the sale window is perfectly legal, it highlights what could have happened had the government not set a price range.
The airlines were asked to sell the tickets at 40 percent less fare when flights resumed in the last week of May 2020. While the fare restrictions have been extended to March 31, the median fare mandate has been brought down to 20 percent seats.
Now, airlines have to sell 20 percent of the seats below the midpoint of the fare range and the remaining can be priced higher. Even if they are below the ceiling price, the fare would be higher than the median fare. This is based on assumption that the market starts performing better.
The airlines would have been gone back to normal if the fare cap wouldn’t have been extended where a flash sale by one is a signal to others to match the offer.
Earlier the challenge was only to bring the more of first-time passengers but now they also need to bring regular flyers back. Whatever the airline surveys say the recovery of aviation industry is not going to be easy.