Jet, Indigo, Kingfisher and others worried on Air India Fare cut

Mumbai: National
carrier Air India's
move to lower fares by up to 20% on
certain routes since January this year
to prop up its falling market share is
making other airlines see red as they face the prospect of taking a hit on
their profits. Airlines are worried that the national
carrier's dash for market share has
come at a time when oil prices have
risen to record highs due to the Libyan
crisis, raising their operational costs as
much as 50% in some cases. " Air India is offering all their seats at
prices that are lying at the bottom of
the yield bucket. They are reducing
fares by as much as.`1,000 and
competing with us by dropping fares,
especially on the Delhi-Mumbai routes," said the CEO of a low-cost
airline who did not wish to be
identified. "A drop of .`100 in yield will
bleed airlines by .`3 crore." Despite having the largest fleet, Air
India was recently overtaken by low-
cost airline IndiGo in terms of market
share. The national carrier has a
market share of 15%. It has long
lagged behind Jet and Kingfisher , the two large sector airlines. Air India's
move has had some impact in
January-March 2011 quarter, say
analysts. "Air India has dropped fares in the last
quarter by 20%-30%. This forced
other airlines to follow suit. With fuel
costs up by more than 40%, this drop
in fares by Air India has become a
game changer for the fourth quarter of the last financial year," said Kapil
Kaul , CEO, (Indian sub-continent &
Middle East), CAPA. Air India defends the strategy by
saying that its market share has gone
up and it has become competitive.

Pilots win nothing, Air India Losses 150 crores

New Delhi: After 10
days of hard
bargaining, striking Air India (AI)
pilots patched up with the
government on Friday with the former
gaining hardly anything in the process but causing the bleeding national
carrier losses of more than Rs 150
crore and further denting its
reputation. With the pilots calling off
their strike, AI will resume domestic
services from midnight of Friday. The Indian Commercial Pilots
Association (ICPA) - which has as its
members 700 pilots belonging to the
former Indian Airlines - had declared a
strike from the midnight April 26-27. They were joined by another 200-odd
management pilots a day later,
crippling AI's domestic network. The AI management had sacked
seven pilots, suspended seven others
and derecognised the ICPA. So, after the 10-day face-off with the
government, all that the pilots got was
re-recognition of their association and
reinstatement of the sacked and
suspended pilots. The decision to call off the strike hasn't
gone down well with a section of ICPA
pilots and there was a clear split in its
ranks. "We are back to square one. The
government hasn't conceded an inch
and we, on the other hand, have lost
10 days' pay and an assurance of a
salary of 60-hours. What was the point
of doing all this?" a pilot asked. ICPA general secretary Rishabh Kapur
conceded that they hadn't got any
commitment on the allowances ICPA
had demanded. He said implementation of the report
of the justice (Retd) Dharmadhikari
Committee - which is looking into
issues of wage rationalisation and
level mapping - would be shared with
them by November.