(Any opinions expressed here are those of the author and not of Reuters)
Indians like it cheap — be it a car, a phone call or airfare. If that plane ticket is about 25 percent cheaper than a train ticket, you can imagine the rush to buy.
Airlines in India are doing just that. Jet Airways, until recently the biggest Indian carrier, offered 2 million tickets at nearly half price in a “goodwill gesture”. Its website crashed soon after, just as SpiceJet’s did when it offered a million tickets for just 2,013 rupees last month. That led many to believe the offer was a hoax.
I was lucky to book a New Delhi-Guwahati return ticket for March, paying just 3,578 rupees compared to the 13,047 rupees I paid for a one-way ticket as recently as November, and 4,420 rupees for the cheapest round-trip ticket on the Rajdhani Express, India’s premier long-distance train.
No doubt reduced fares are excellent news for consumers. But does it make business sense?
Indian airlines hardly make money, and everyone knows the fate of Kingfisher Airlines. High fuel prices and expensive airports make India a tough sell for airlines, with tickets usually priced below cost. State taxes up to 30 percent make jet fuel more than 50 percent more expensive in India compared to the global average, one of the reasons why foreign carriers prefer to stay away from the local market.
