After domestic aviation markets witnessed a massive change in ticket pricing and marketing strategies due to the entry of low cost carriers, it now seems to be the turn of the global aviation market to undergo the same change.
Budget airlines are gearing up to begin operations along short haul international routes. Airlines based in India such as SpiceJet and foreign airlines such as FlyDubai and AirAsia are among the list of low cost carriers preparing to compete against full-service carriers in various international sectors.
The success story of the low-cost air travel model in India’s aviation market has influenced many airlines to choose India as one of the targeted markets. In a period of seven years, low-cost carriers in India have managed to capture 68 percent of the domestic aviation market share.
While airlines such as AirAsia and FlyDubai, which already operate flights to India, are planning to expand their operations, other low-cost carriers such as Singapore-based Tiger Airways, Hong-Kong-based Dragon Airways and Thailand-based SilkAir are drawing up plans to enter the domestic aviation sector. Dubai based-Air Arabia has even planned to enter into a partnership with a travel distribution company to increase the availability of its ticketing service for passengers in India.
Malaysia-based AirAsia will expand its operations in India, which presently covers six cities, to include Hyderabad and New Delhi as part its network in late July and early August respectively.
The price war in the domestic aviation sector that was triggered by low-cost carriers is expected to take place in the global aviation market as well, with the entry of budget carriers. FlyDubai has priced the tickets for its Lucknow-Dubai service at Rs 13,000, which is half of the fare charged by Air India. AirAsia has also introduced its New Delhi-Kuala Lumpur flight service with tickets priced at Rs 11,184 as compared to the Rs 22,824 price charged by Malaysian Airlines along the same route.
However, one of AirAsia’s cheapest tickets is for its one-way flight service between India and Malaysia that costs Rs 3,999. The airline’s India head Suresh Nair has said that its low fares would attract middle class and first-time flyers along its routes and the company will also spend $5 million to advertise and promote its services in the country.
Private Indian low-cost carrier SpiceJet has also announced its foray into the international market in the month of August with flights to Colombo, Kathmandu and Dhaka. The airline will also include many offers and promotions as part of its inaugural service.
However, full services carriers such as Air India do not seem to be threatened by the arrival of budget airlines in the international sector. One of the airline’s high-ranking officials has said that the cheap pricing of tickets will only increase the growth of the market at a rate of around 15 to 20 percent in the next two years. Emirates, another full-service carrier, is also expanding its fleet capacity by ordering 32 Airbus A380 aircrafts at a price of over $11 billion.
But industry analysts predict that the price war spurred by the arrival of low-cost airlines will bring down the average ticket fare for international flights. The short haul low-cost flights could even provide cheaper options for passengers travelling over a long distance by offering connecting flight services. The no-frills air travel sector is also expected to witness a growth due to the increasing passenger traffic from India, though industry insiders warn that disorganized expansion could lead to losses for airlines such as the previous loss of billions of dollars in the domestic aviation sector in a period of two years.
Although the outgoing international passenger traffic from India has risen by 11 to 12 percent in the month of June, it remains to be seen how Indian low-cost carriers, which pay higher prices for fuel and airport services as compared to their middle Eastern counterparts, will take on the international market.
Budget airlines are gearing up to begin operations along short haul international routes. Airlines based in India such as SpiceJet and foreign airlines such as FlyDubai and AirAsia are among the list of low cost carriers preparing to compete against full-service carriers in various international sectors.
The success story of the low-cost air travel model in India’s aviation market has influenced many airlines to choose India as one of the targeted markets. In a period of seven years, low-cost carriers in India have managed to capture 68 percent of the domestic aviation market share.
While airlines such as AirAsia and FlyDubai, which already operate flights to India, are planning to expand their operations, other low-cost carriers such as Singapore-based Tiger Airways, Hong-Kong-based Dragon Airways and Thailand-based SilkAir are drawing up plans to enter the domestic aviation sector. Dubai based-Air Arabia has even planned to enter into a partnership with a travel distribution company to increase the availability of its ticketing service for passengers in India.
Malaysia-based AirAsia will expand its operations in India, which presently covers six cities, to include Hyderabad and New Delhi as part its network in late July and early August respectively.
The price war in the domestic aviation sector that was triggered by low-cost carriers is expected to take place in the global aviation market as well, with the entry of budget carriers. FlyDubai has priced the tickets for its Lucknow-Dubai service at Rs 13,000, which is half of the fare charged by Air India. AirAsia has also introduced its New Delhi-Kuala Lumpur flight service with tickets priced at Rs 11,184 as compared to the Rs 22,824 price charged by Malaysian Airlines along the same route.
However, one of AirAsia’s cheapest tickets is for its one-way flight service between India and Malaysia that costs Rs 3,999. The airline’s India head Suresh Nair has said that its low fares would attract middle class and first-time flyers along its routes and the company will also spend $5 million to advertise and promote its services in the country.
Private Indian low-cost carrier SpiceJet has also announced its foray into the international market in the month of August with flights to Colombo, Kathmandu and Dhaka. The airline will also include many offers and promotions as part of its inaugural service.
However, full services carriers such as Air India do not seem to be threatened by the arrival of budget airlines in the international sector. One of the airline’s high-ranking officials has said that the cheap pricing of tickets will only increase the growth of the market at a rate of around 15 to 20 percent in the next two years. Emirates, another full-service carrier, is also expanding its fleet capacity by ordering 32 Airbus A380 aircrafts at a price of over $11 billion.
But industry analysts predict that the price war spurred by the arrival of low-cost airlines will bring down the average ticket fare for international flights. The short haul low-cost flights could even provide cheaper options for passengers travelling over a long distance by offering connecting flight services. The no-frills air travel sector is also expected to witness a growth due to the increasing passenger traffic from India, though industry insiders warn that disorganized expansion could lead to losses for airlines such as the previous loss of billions of dollars in the domestic aviation sector in a period of two years.
Although the outgoing international passenger traffic from India has risen by 11 to 12 percent in the month of June, it remains to be seen how Indian low-cost carriers, which pay higher prices for fuel and airport services as compared to their middle Eastern counterparts, will take on the international market.
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