LAXDESI
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India: Price Wars Have Begun

Thu May 19, 2005 4:20 am

Kingfisher has announced an everyday fare of about $70 for Bombay-Bangalore
sector. This compares to Jet/Sahara fare of $150. Kingfisher is more of a threat to Jet/Sahara than Air Deccan/Spice Jet' as they offer better equipment, and comparable service, and better frequency(long run). Kingfisher's strategy is to offer about six services between two points.

Link:http://www.business-standard.com/common/storypage.php?storyflag=y&leftnm=lmnu1&leftindx=1&lselect=1&chklogin=N&autono=189363
 
karan69
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RE: India: Price Wars Have Begun

Thu May 19, 2005 6:36 am

Spice jet has announced 99 rs fares to all its opening sectors for 99 seats and for 99 days----

99% of which have already been sold out
 
LAXDESI
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RE: India: Price Wars Have Begun

Thu May 19, 2005 7:56 am

The Kingfisher fare is valid for a month, all seats/all BOM-BLR flights. It is interesting that it did not take them long to drop their fares to such low levels, given that they had a everyday fare which was lower than Jet/Sahara by 30%. Wasn't that enough to fill seats?

The more important question is: Is the fare of $70 profitable. A LCC using 737 or A320 should have a CASM of US$0.07 per seat mile. The distance between BOM-BLR is 527 miles which translates to a cost of $37 per seat on a full flight. Assuming a load factor of 70%, the cost per seat should be about $53. This still leaves a nice profit of $17 per seat. Perhaps these low fares will be sustained beyond a month.

A fare of $70 will entice many rail passengers to switch to air travel instead, resulting in a growth greater than 20% projected for the next five years in the aviation sector.

[Edited 2005-05-19 01:27:46]
 
aseem
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RE: India: Price Wars Have Begun

Thu May 19, 2005 8:11 am

next question!!
"India: Shake Out Has Begun"
rgds
VT-ASJ
ala re ala, VT-ALA ala
 
LAXDESI
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RE: India: Price Wars Have Begun

Thu May 19, 2005 8:22 am

Quoting Aseem (Reply 3):
next question!!
"India: Shake Out Has Begun

Will the market grow enough to allow 6-8 domestic airlines(Jet/Sahara/IA/AD/Spice/Kingfisher and soon to join Go,AI Express,IA-LCC).

Perhaps there will be regionalization of the aviation market in India, as it happened in US. Or India could skip that phase and end up with 3-4 players, who are all also international players. My money is on Jet, Kingfisher, Air Decccan, and a merged AI/IA.

I would like to hear what others think.
 
aseem
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RE: India: Price Wars Have Begun

Thu May 19, 2005 8:34 am

Quoting LAXDESI (Reply 4):
I would like to hear what others think.

jokes apart!! the future is for those who move fast. Jet is doing pretty good. Sahara looks shaky on international front, but on domestic it was wise for them to move over to HYD. Shows their broader perspective, and clearly defines their intention to capture SEAsia.
Kingfisher seems focused and knows where to go, and the kind of brand recognition the tend to achieve. They've clearly stated that rather than down to earth service, they'd prefer to provide better service for higher price. They have PTV on economy seats.
Air Deccan gives a feeling of being on the edge, but they'll hang around by virtue of being market leader in LCC. We shall see them stabilize in coming months/years.
Don't expect to see AI and IC being merged. They'll continue to compete among each other. With due respect to IC, they don't seem to be showing global perspective. It is an excellent opportunity for them to redefine their brand image on international operations. They need to get over the inferiority complex of being a Govt domestic carrier. They should think BIG.
As for SpiceJet and GO, your guess is as good as mine.
rgds
VT-ASJ
ala re ala, VT-ALA ala
 
mrniji
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RE: India: Price Wars Have Begun

Thu May 19, 2005 1:02 pm

Quoting LAXDESI (Reply 4):
Perhaps there will be regionalization of the aviation market in India, as it happened in US.

This is a very likely outcome (or several players serving several routes nearly out of competition)
"The earth provides enough resources for everyone's need, but not for some people's greed." (Gandhi)
 
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HAWK21M
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RE: India: Price Wars Have Begun

Thu May 19, 2005 1:14 pm

Quoting Karan69 (Reply 1):
Spice jet has announced 99 rs fares to all its opening sectors for 99 seats and for 99 days----

99% of which have already been sold out

Whats with this 99 stuff.

Quoting LAXDESI (Reply 4):
Will the market grow enough to allow 6-8 domestic airlines(Jet/Sahara/IA/AD/Spice/Kingfisher and soon to join Go,AI Express,IA-LCC).

If the costs drop & Pax opt from Trains to Airlines,Yes.
Else get ready for the Bursting VBubble in Two years.  Smile

Quoting LAXDESI (Reply 4):
My money is on Jet, Kingfisher, Air Decccan, and a merged AI/IA.

I would say 9W is doing well.
S2 a bit shaky.The next few months would be critical.
Kingfisher has started off cautiously,the correct way.
Air Deccan has gone to fast on Expansion spree.{needs to get Flt ops/Mx staff sorted out]
AI Express is just starting out,Will do well.
AI/IC Merging.....Not likely.
About Spice Jet.I think they will do well,AD Style.
New Entrants.....Better if they wait.
Personally.....A Lot of Job offers on the cards  bigthumbsup 
regds
MEL
I may not win often, but I damn well never lose!!! ;)
 
karan69
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RE: India: Price Wars Have Begun

Thu May 19, 2005 4:25 pm

Quoting LAXDESI (Reply 2):
A fare of $70 will entice many rail passengers to switch to air travel instead,

I dont think so---the second class non-ac rail ticket from BOM-BLR is 400 INR or 8 USD
 
mrniji
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RE: India: Price Wars Have Begun

Thu May 19, 2005 4:50 pm

Quoting Karan69 (Reply 8):
Quoting LAXDESI (Reply 2):
A fare of $70 will entice many rail passengers to switch to air travel instead,

I dont think so---the second class non-ac rail ticket from BOM-BLR is 400 INR or 8 USD

Neither do I, considering that rail tickets are much more flexible, too
"The earth provides enough resources for everyone's need, but not for some people's greed." (Gandhi)
 
LAXDESI
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RE: India: Price Wars Have Begun

Fri May 20, 2005 12:22 am

Quoting Karan69 (Reply 8):
Quoting LAXDESI (Reply 2):
A fare of $70 will entice many rail passengers to switch to air travel instead,

I dont think so---the second class non-ac rail ticket from BOM-BLR is 400 INR or 8 USD

Isn't the appropriate comarison to second class AC fares? Does anyone know that fare.
 
tundra767
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RE: India: Price Wars Have Begun

Fri May 20, 2005 2:58 am

Do you think they will start a are war on the JFK and LHR flight with Jet Airways joining AI on the route?
 
LAXDESI
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RE: India: Price Wars Have Begun

Fri May 20, 2005 3:13 am

Quoting Tundra767 (Reply 11):
Do you think they will start a are war on the JFK and LHR flight with Jet Airways joining AI on the route?

Jet airways will be flying to EWR through Brussels. Jet will not start a price war. They will offer a better product than LH, BA, and all others and hold on to higher margins. However, with increased capacity, prices will inevitably fall on USA/LHR sector.
AI is always a wild card. When faced with low load factors, they tend to discount heavily, affecting overall prices.
 
aseem
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RE: India: Price Wars Have Begun

Fri May 20, 2005 3:20 am

here are the Indian Railway fares between BOM and BLR
AC 2T is Rs.1583
AC 3T is Rs.1009
Sleeper Rs.369

couldn't get the data for First AC, those people already travel by airlines and it mostly railway staff that enjoys the booty.
rgds
VT-ASJ
ala re ala, VT-ALA ala
 
LAXDESI
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RE: India: Price Wars Have Begun

Fri May 20, 2005 5:00 am

Quoting Aseem (Reply 13):
here are the Indian Railway fares between BOM and BLR
AC 2T is Rs.1583
AC 3T is Rs.1009
Sleeper Rs.369

AC 2T with sleeper is about US$ 45, not too far from the $70 offered by Kingfisher. Add to it the time saving factor, IMO, many using AC 2T would switch to Air travel.
 
karan69
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RE: India: Price Wars Have Begun

Fri May 20, 2005 5:13 am

Kingfisher just dropped the fare by another 1000 INR, my dads flying BLR-BOM tom on their 2000 hrs flight for a price of only 2900 INR
 
shawnnyc
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RE: India: Price Wars Have Begun

Fri May 20, 2005 5:19 am

Quoting LAXDESI (Reply 14):
AC 2T with sleeper is about US$ 45, not too far from the $70 offered by Kingfisher. Add to it the time saving factor, IMO, many using AC 2T would switch to Air travel.

While in dollar terms $25 is not much, in rupees a Rs 1050 savings is still a savings for a ton of people. Fortunately for both air and rail, the amount of people who can afford to travel keeps growing. I look at the benefits of cheaper airfare to mean it will stimulate people to travel for shorter visits (weekends) and should increase business travel within India (make the overall pie bigger). It also tightens the net linking the different parts of India as never before (I will say the Indian railways have done a pretty good job of this given their old infrastructure).
 
LAXDESI
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RE: India: Price Wars Have Begun

Fri May 20, 2005 8:11 am

SORRY FOR POSTING IT AGAIN BY MISTAKE
Quoting Aseem (Reply 13):
here are the Indian Railway fares between BOM and BLR
AC 2T is Rs.1583
AC 3T is Rs.1009
Sleeper Rs.369

AC 2T with sleeper is about US$ 45, not too far from the $70 offered by Kingfisher. Add to it the time saving factor, IMO, many using AC 2T would switch to Air travel.

[Edited 2005-05-20 01:14:51]
 
LAXDESI
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RE: India: Price Wars Have Begun

Fri May 20, 2005 8:22 am

Quoting Shawnnyc (Reply 16):
While in dollar terms $25 is not much, in rupees a Rs 1050 savings is still a savings for a ton of people

You are correct in your observation.

Quoting Shawnnyc (Reply 16):
I look at the benefits of cheaper airfare to mean it will stimulate people to travel for shorter visits (weekends)

This is an insightful point. Many more trips are possible with low fare air option for leisure, and meeting relatives/friends. This in itself will create more demand, even if not much switching takes place from AC 2T rail category.
 
aseem
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RE: India: Price Wars Have Begun

Fri May 20, 2005 9:10 am

guys!! I am on Indian Railway forum as well, the impact of LCC is being discussed over there as well. The point they advocate is the relative accessibility of railway station. Add the cost of taxi to airport, both origin and destination and then calculate the cost. They do have a point!!
In my opinion, LCC are still not cheap enough to encourage those paying from their own pocket to switch to airlines, especially if more than one person is traveling. Moreover overnight trains between major cities are relatively popular and help save time. You get full days before and after the journey.
If your company is paying for your trip, then its a different story.
rgds
VT-ASJ
ala re ala, VT-ALA ala
 
LAXDESI
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RE: India: Price Wars Have Begun

Fri May 20, 2005 9:26 am

Quoting Aseem (Reply 19):
Add the cost of taxi to airport, both origin and destination and then calculate the cost. They do have a point!!

That's a valid point.

Quoting Aseem (Reply 19):
Moreover overnight trains between major cities are relatively popular and help save time. You get full days before and after the journey.

I do not believe Bangalore-Bombay is just an overnighter. You do have to use part of your working day to complete the trip.
 
aseem
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RE: India: Price Wars Have Begun

Fri May 20, 2005 9:47 am

Quoting LAXDESI (Reply 20):
I do not believe Bangalore-Bombay is just an overnighter. You do have to use part of your working day to complete the trip.

Mine was generalized statement. In fact BOM-BLR is an exception for IR, and distances were far greater when Konkan Railway was not built. But for LCC phenomena to be successful, they'll have to fly routes where overnight trains are successful. For example, DEL-Patna is almost overnighter with fastest express train available. It leaves DEL around 6pm and reaches Patna around 8am, covering a distance of 1000km.
rgds
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ala re ala, VT-ALA ala
 
Nimish
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RE: India: Price Wars Have Begun

Fri May 20, 2005 7:18 pm

Quoting LAXDESI (Reply 12):
Jet will not start a price war. They will offer a better product than LH, BA, and all others and hold on to higher margins

The fares quoted by 9W for June/July/August BLR-LHR-BLR are Rs. 30K/37K/40K + taxes respectively. Definitely not cheap fares, consider UL is offering BLR-LHR in June for 27K, and LH is offering the sector for 42K and no change penalties (9W's fares have change penalties).

I need a good reason to fly 9W over UL (given the price diff my company is likely to push me onto UL), I'm thinking of one at the moment  confused . That would mean I'll fly 9W 1/June BLR-BOM-LHR!
Latest Trip Report - GoAir BLR-BOM-BLR
 
Nimish
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RE: India: Price Wars Have Begun

Fri May 20, 2005 7:29 pm

Quoting Nimish (Reply 22):
I'm thinking of one at the moment

I unfortunately just found a reason not to fly 9W - the fare quoted is on H class, and will not earn me any JP miles. I'm definitely going to steer away from them if I can  Smile So probably UL this time at the total fare of 32K BLR-LHR-BLR (no stopover in Colombo unfortunately)
Latest Trip Report - GoAir BLR-BOM-BLR
 
karan69
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RE: India: Price Wars Have Begun

Fri May 20, 2005 7:40 pm

Quoting LAXDESI (Reply 20):
I do not believe Bangalore-Bombay is just an overnighter. You do have to use part of your working day to complete the trip.

It is a 24 hour rail journey
 
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HAWK21M
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RE: India: Price Wars Have Begun

Fri May 20, 2005 11:22 pm

Spice Jet is all set for the 23rd.
And 9W too.
 bigthumbsup 
regds
MEL
I may not win often, but I damn well never lose!!! ;)
 
Koko
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RE: India: Price Wars Have Begun

Sat May 21, 2005 12:56 am

Does anyone know whether Kingfisher is planning on a route into the UK? If so, any leads as to who might be the right person to contact?

Thanks!
Unorthodox approaches result in the best landings...
 
LAXDESI
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RE: India: Price Wars Have Begun

Sat May 21, 2005 1:28 am

Quoting Koko (Reply 26):
Does anyone know whether Kingfisher is planning on a route into the UK? If so, any leads as to who might be the right person to contact?

Kingfisher can not fly any international routes for the next five years as per the current policy. It is possible this policy may be revised, perhaps after a year or so.
 
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HAWK21M
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RE: India: Price Wars Have Begun

Sat May 21, 2005 5:18 pm

Quoting Koko (Reply 26):
Does anyone know whether Kingfisher is planning on a route into the UK? If so, any leads as to who might be the right person to contact?



Quoting LAXDESI (Reply 27):
Kingfisher can not fly any international routes for the next five years as per the current policy. It is possible this policy may be revised, perhaps after a year or so.

Might be revised to Three years in the Future.
regds
MEL
I may not win often, but I damn well never lose!!! ;)