Gulf Airlines engulfed in Indian fare dogfight, offer cheaper tickets

emiratesMiddle-Eastern carriers have upped the ante to snare overseas-bound Indian travellers with lower fares this season, with Etihad and Emirates being the first to stir the market with discounts, much to the dismay of India’s national carrier Air India.

On Sunday, Abu Dhabi carrier Etihad, which bought a stake in Jet Airways last month, quietly announced discounted fares for a limited period for travel to cities in the EU, US and Africa from various Indian cities. On Monday, arch-rival Emirates, the largest foreign carrier in India by market share, responded by offering network-wide savings of 8% to foreign destinations.

Air India fears the discounts are part of Etihad’s long-term strategy of pulling fares down in order to capture a large chunk of Indian traffic to overseas destinations.

“When price levels go down, everyone’s revenues will go down. Moreover, the traffic will go to Abu Dhabi instead of coming to our Delhi hub. We’ll be able to respond to this move after looking at how advance-booking loads look,” said a senior Air India official.

Etihad’s website lists return fares on routes such as Kozhikode-Frankfurt, New Delhi-Manchester and Ahmedabad-Amsterdam that are open for bookings till May 23 for travel till June 30. These fares are lower by a few thousand rupees compared with prevailing prices. Etihad did not respond to ET’s email query on the rationale behind the discounts.

Similarly, discounted return tickets are available for online booking till May 31 from Ahmedabad, Bengaluru and Hyderabad for trips to Dallas, Washington and Chicago, apart from offers on destinations such as Athens, London, Johannesburg and Nairobi from other Indian cities.

Meanwhile, Emirates has offered savings of 8% on its network for bookings made by May 24 for travel till July 31.

The discounts displayed on Etihad and Emirates websites are dynamic in nature, meaning they are not fixed or uniform and vary on different dates according to seat availability.

As demand from India for flying to foreign destinations remains depressed compared with last year, the travel industry is of the view that it is inevitable that other foreign carriers will lower fares to stimulate the market.

According to travel technology solutions conglomerate Bird Group Executive Director Ankur Bhatia, demand is very weak this year, leading to a “softening of fares for destinations to the EU and the US”.

Lowering Fares Only Option

“Not only Gulf carriers, but even European carriers are expected to follow the same strategy to stimulate the market,” Bhatia said.

Travel portal’s COO Sharat Dhall also thinks lowering fares is the only way airlines can get Indian travellers to fly abroad this summer season. “We are hoping fares to come off by at least 10% with initiatives taken by airlines to stimulate the market. The current discounts by Etihad and Emirates only seem to be the starting.”

In the backdrop of the deal between Naresh Goyal-owned Jet Airways and Abu Dhabi’s national carrier Etihad, the two countries have decided to revise air capacity by 36,670 seats per week from the existing 13,300 seats per week, sparking concerns among the local airlines and private airports.

As Etihad increases flights to India, experts feel they will slash fares to woo the Indian flier and fill capacity, forcing other Indian and foreign carriers to follow suit causing a fare war in the future.

“Fares this season have been holding steady and have not gone above last year’s average (unlike the sharp spike that we witnessed last year). As more capacity gets added, the fares are bound to come down and the customers are going to get better deals,” the country’s largest travel portal CEO Deep Kalra said.


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