Despite a stringent warning from the DGCA to stop ‘predatory’ pricing, lCC carrier Spicejet has continued to hardsell its Rs 1 fare and has retorted that there was nothing wrong with the offer as it benefited, by and large, the travel industry.
“The airline’s offer has already been subscribed in a big way and is a major draw,” said sources in the Indian Association of Tour Operators (IATO).
The airline has sold over thousands of the Rs 1 ticket after its offer and many of them online. With this the lCC is faced with another complication as to how to return the fares of the already booked tickets. Attempts to contact Spicejet did not evince response.
Retorting to the DGCA’s directive on Tuesday, the lCC’s has held its stand and said ‘this kind of low-fare market stimulation and inventory management (if done properly) is essential for the lCC (low-cost carrier) business model, and is a key part of the strategy for low-cost airlines such as Air Asia, RyanAir, Southwest, EasyJet globally, and benefits the wider travel industry and economy at large due to the stimulation and ‘economic multiplier’ effect.’
Just a few hours after SpiceJet had floated the rupee one low fare offer on Tuesday, which is valid for domestic travel till next year, the DGCA shot off a strongly-worded directive to the airline asking it to stop the three-day offer ‘immediately.’
DGCA had called the offer as “predatory” and a “malpractice”, thereon it had asked the airline to stop the scheme with immediate effect. It had said that such pricing was “not only predatory”, but it amounted to “malpractice” and has said that only one or two seats were being offered on each flight at the rate of one rupee amounted to “deceiving the travelling public”, it said, adding that the airline was making such an offer for 91 sectors across the country.
The carrier also claimed that such one rupee tickets were earlier offered by the erstwhile Air Deccan, which was later acquired by liquor baron Vijay Mallya’s Kingfisher Airliness before folding up.
SpiceJet, which is facing substantial losses, has been virtually leading a fare war in the lCC sector since January by making offers leading other lCCs to follow suit. In its latest offer, apart from the rupee one offer, the airline has also announced two special schemes, offering the travellers Rs 799 and Rs 1499 ticket prices, excluding taxes and airport fees, with a booking window of three days. The travel period for the tickets booked under these schemes would remain valid till March 28 next year from this July
SpiceJet had kickstarted the first fare war on January 21 by announcing 50 per cent off on tickets for travel till April 15. Following this all the airlines had followed suit and slashed fares.
SpiceJet was the first to launch the fare war, announcing a ‘Second Chance’ sale of 30 per cent discounted tickets on domestic routes for a limited number of seats, which was soon followed by IndiGo’s sale of a ‘Happy Weekend’ offer.
later GoAir had followed suit with a similar scheme, while JetAirways and JetKonnect offered a 30 per cent discount on the base fare and fuel surcharge like SpiceJet, but did not put any restriction on the weekdays when such tickets would be available for travel. Air India did not join the fare war.
However, SpiceJet scrips rose by over 19 per cent to settle at Rs 17.27 on the BSE, after rallying to Rs 17.38, its upper circuit limit, during the day. SpiceJet’s market value climbed Rs 149 crore to Rs 924 crore. About 113 lakh shares of the company changed hands on the BSE.