Mumbai: Your low-cost joyrides in the Indian skies may no longer be that joyful. Rapid consolidation among the major domestic airlines now means lesser competition, which could be the perfect breeding ground for cartels and fare fixing.
After two mega mergers in Indian skies in recent time — the Jet-Sahara and Air India-Indian deals — Vijay Mallya's acquisition of a controlling stake in Air Deccan may mean a few more zeroes after its single digit fares.
"We will no longer sell tickets at a loss. But that does not mean there will be any immediate fare hike," Vijay Mallya, owner of Kingfisher Airlines, says.
Air Deccan's Managing Director Capt GR Gopinath also hints at costlier air travel now. "Because of greater efficiency, we will be able to price our tickets higher," he says.
In the past few years, underpricing of tickets has led to losses across the board in Indian aviation. Airline like Air Deccan has been consistently offering tickets below cost, even pricing some tickets at Rs 0 plus taxes.
SpiceJet has released over 2 lakh tickets worth 99 paise each in the recent months. Such low fares have meant a loss of Rs 400 to Rs 650 per passenger per flight.
Other low-cost players like SpiceJet are, however, keeping their cards close to their chest. But any upward movement in the prices of Air Deccan tickets would definitely give a clear signal to other low-cost players to hike prices.
"Consolidation is good for the industry. Now no one will operate under-cost," Siddhanta Sharma, CEO of SpiceJet, points out.
Talks among the airlines to stabilise prices fell through last year. But now it seems the same agenda might get pushed through thanks to the consolidation. The aviation industry hopes that the consolidation will end undercutting, but passengers will get better services only at a higher cost.
(With Neha Sharma in Delhi)
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