Is the "fare war" among airlines healthy for the customers and economy?
Is the “fare war” among airlines healthy for the customers and economy?
The peak travel season is seeing a fall now. Indian carriers, including Air India have started offering low-priced tickets for a limited period within the country. This has triggered a fare-war. Many other airlines like Spice jet and Indigo have joined the war to stay competititve. Is this price war going to benefit the ultimate customer or not? Let us see:
For the argument
1. Whenever there is such a competition in the market, prices slow down ultimately giving big relief to customers.
2. Fare-war among airlines opens many choices for the middle class customer who otherwise would have chosen the low cost airline irrespective of the quality.
3. Fare war ends up breaking the cartelization by few big airlines who keep the air fares soaring especially during festive season.
4. With low fares, there is a increase in number of customers giving boost to the airline industry and recouping its damages.
5. Low fares make the air transport more accessible to the larger population and also leads to increase in air travel density which is a good sign for the economy.
Against the argument
1. The fare-war forces the airlines to deduct their fare prices to survive the competition irrespective of their financial damages which is threatening for the economy.
2. Many a times to cater customers, airlines deduce the fare prices but at the cost of quality of service which is troublesome for a lot of regular passengers.
3. Airline industry, as we already know is not in a healthy state and such fare-war damage their economy to a great extent.
4. Low cost airline may sustain but such practices give a big jolt to major big airline players in the market.
5. A lot of time deduced fare tickets come at the cost of “conditions applied” creating trouble for customers.
Conclusion
Price-war among airlines can prove to be a boon if they are properly watched out and analysed by the DGCA but they can result in a trouble for economy and customers if they are not closely regulated. The demands for a mechanism to regulate air fares has been a hot point of discussion and after such “fare-wars” it becomes a necessity in order to avoid the inconvenience to the customers and trouble to economy.
Discussion
- RE: Is the "fare war" among airlines healthy for the customers and economy?
- Due to increasing competition and to stay in the aviation industry, airlines have come up with a new concept of low cost airlines. In this many airlines including Air India, Spice jet and Indigo have reduced the prices of their tickets to attract more customers and provide them cheap flight tickets. This has undoubtedly proved beneficial for the consumers. They are getting low priced tickets for their travel. Middle class people can also plan their air travel in advance and fly through these airlines. This also proves advantageous to the airlines as all their seats get booked because of this. But from the economy point of view it might not be a very good idea. As the costs of the plane and fuel are the same, the airlines might not make as much profit as they used to. This in turn leads to less revenue generated by the aviation sector to the government. Thus, this “fare war” has both positive and negative sides of itself.
- RE: Is the "fare war" among airlines healthy for the customers and economy?
- Air fare war has come with its own pros and cons. It is undoubtedly favourable for
customers who could not have thought of air travel before because of high
prices .It is economical for Freuent flyers as they can plan their travel in advance
and get the tickets booked . Airlines participating in the "fare war " also gain from
this practice as their previously vacant seats gets filled up leading to a increase in
their net revenue. However fare war does not seems to be a very good prospect
for the economy and aviation industry as airlines might reduce fare to attract
customers and earn revenues but it will have very less effect on their profits as
fares will be low but costs will remain the same. Also the non participating airlines
will loose their customers and revenue to other airlines. The overall profits arising
from aviation industry will more or less be the same or might just get negative if
the price cut is too large .
