Thursday, 22 January 2015

More to Air India's discounting spree than a Reaction to Vistara News

Huge sale on domestic tickets offered by the Air India last week may have grabbed the expected crowd of the flyers and stimulated air travel booking; the flash discounting is considered as a reaction to Vistara, but the picture is much wider than this. The fact is Air India is struggling to shore up its brand image by encouraging flyers to travel on their new wide-body Boeing 787 Dreamliner fleet.

Air India has recently launched this airbus that is extensively deploying on domestic routes. The airline expected Boeing 787 dreamliner fleet will give the company an edge in the market as the brand has faced trouble due to the perceptions of offering lower service quality standards than its private sector peers.

The airline’s collected losses are already at about Rs 50,000 crore. The participation of Air India in this loss is about the half. Apart from this, the airline offered a 50% discount to Book Domestic Flights in India.

The picture behind this is that this leading airline can clearly take a margin hit even offering some seats below the cost of fuel since its funding is secured by the sovereign guarantee of the government of India. Offering such deep discounting that’s where will be a great challenge to other carriers where IndiGo making profit, though Jet has recorded losses of over Rs 4,000 crore in 2013-24.

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