Oil price rise fails to land low-cost airlines

New Delhi, May 7: No-frill carriers begin aggressive marketing to attract passengers despite skyrocketing jet fuel prices that have affected the financial health of the aviation industry.

Though full-service carriers have already decided to hike base fare by 10 per cent and also raised fuel surcharge, some major low-cost airlines have begun promotions to attract the summer rush.

GoAir recently introduced return zero fare tickets under ‘GoHappy Fares’ plan, while low-cost arm of Air India, Air India Express offered domestic travellers a fare of Rs 99 plus taxes.

Air Deccan, which has been taken over by Kingfisher Airlines and Spicejet are already in the race offering such sops.

For AI Express, which has been primarily operating on international routes, this is an effort to reach out to the domestic market.

Most of the no-frill carriers generate a major portion of their sale volume through online booking of tickets.

It is over 45 per cent in the case of GoAir, with almost 35 per cent of the bookings are done only over a week in advance.

Through sops like ‘GoHappy Fares’, the Wadia family promoted airline wants to enhance share of the online bookings to about half the total sales volume.

The Geneva-based global airline body has estimated that such a move by the global aviation industry would enable it to save up to three billion US dollars annually. Besides continuously increasing and spreading its distribution network and making it easy for customer to buy the services it offers, GoAir and other carriers have emphasised on early bookings.

This is primarily driven by the low fare carriers’ strategy to focus on high volumes compared with the full service carriers’ focus on low volume strategy.

Noting that the average booking on a train was made two months in advance, the industry sources said that this was done not to get a cheaper fare but to get a confirmed seat.

However, the low-cost carriers’ push for early volumes was to allow consumers to get the benefit of "cheaper and confirmed seats".

GoAir chief executive officer Mr Edgardo Badiali said the offer of ‘GoHappy Fares’ was to ensure that customers get the best deal on early bookings through the website.

He said the airline has been recording high load factors over the last one year while its market share has jumped from 2.8 per cent to 4.5 per cent on Wednesday.