FLY AWAY WHILE YOU CAN....
By Ruma Dubey
Guptaji was going to book his tickets to Delhi from Mumbai via Rajdhani. The round-trip was to cost him Rs.4200. And then the air fare war was unleashed by Jet Airways and now he has preferred to fly rather than travel by railways. He booked his tickets today on Spicejet for 6th April and the round –trip cost comes to Rs.6580. This is much cheaper than over Rs.13,000 he paid for a one-way ticket to Delhi in November.
The convenience of travelling by flight beats the inconvenience of travelling by train. And like Guptaji, there are many who had never planned to travel by fight or had not even planned on a holiday, but thanks to the fare cuts, many new plans seem to have now taken wings.
Jet Airways shocked everyone by offering 2 million tickets at nearly half price and this, the company said was a “goodwill gesture”. Spicejet soon followed this up and offered million tickets for just Rs.2013. Indigo and GoAir also slashed rates but the state run carrier, Air India, who is probably even rate cuts saving it, remains a mute spectator to the rate cuts.
The big question which comes to mind is – can the airlines afford to fly passengers at these low rates? And if they can then why we were charged, rather fleeced with high rates till a couple of days ago?
Well, there is really no “goodwill gesture” here; no one in corporate world does good without expecting anything in return – it is always you scratch my back and I will scratch yours. So this fare cut is no goodwill gesture; the companies are hoping that the lean season will see a flurry of bookings thanks to these low rates and these volume sales will make up for the lower rates. Thus the airlines cannot really afford these rates but it has no alternative at this point of time.
Running an airline company in India is not easy, rather mostly unprofitable and that is thanks to the high fuel costs and the various state taxes which makes it all the more unviable. A break-up of the air fare shows that the base fare is Re.1 and then there are top ups like passenger service fare, airport fee, service tax and fuel surcharge. The cheapest ticket of Rs.2035 has a fuel surcharge of Rs.1175 and then the next biggest charge is the airport fee. So we are all paying the price for swanky new airports and more importantly, because the Govt is taking a high percentage when it comes to revenue sharing from these User Development Fees. Govt gets around 36% of revenue earned from UDF charges from Delhi airport and 39% from Mumbai airport and AAI’s revenues have increased 100% over the past five years, thanks to these UDFs. So there is no way that these fares are in anyway affordable for the airlines.
Many say there is a lot of politics also involved in these rate cuts. Two of them actually – firstly, these rate cuts ensures that Kingfisher does not take off as it simply cannot afford to fly at these 50-75% lower rates. Secondly, the Indian Railways announced a fare hike and to make flying more affordable and wean a sizeable population from railways, especially from Rajdhani’s to airways, it probably felt this was the best time to cut rates. And there is also whispering in the corridors of Jet that since the Etihad deal has now got mired in some uncertainty, Jet cannot afford to wait any more to better its cash flows.
Whatever be the reason or politics involved, for now, people are happy that they can fly at these cheap rates and the motto of life is – make hay while the sun shines. For once there is some politics which is actually benefitting the people!
As John Denver so beautifully hummed,
“Life in the city can make you crazy
For sounds of the sand and the sea
Life in a high-rise can make you hungry
For things that you can’t even see
Fly away, fly away, fly away”