Mumbai: Air India's move to regain lost market share by dropping fares as much as 20 per cent on certain routes since January this year has other airlines worried faced as they are with rising oil prices. Industry sources say aviation fuel costs may raise operational costs of carriers as much as 50 per cent in some cases.
Air India has taken the battle to private carriers by discounting fares by as much as Rs1,000, especially on the Delhi-Mumbai route.
Flag carrier, Air India, operates the largest fleet in the industry but lags in the fourth place in terms of number of passengers carried. It was recently overtaken by low-cost airline IndiGo, which moved to the third place.
Air India now holds a market share of 15%, lagging behind Jet Airways, Kingfisher and IndiGo.
Analysts say Air India's fare discount of 20-30% has had some impact in the January-March 2011 quarter. The carrier, meanwhile, has defended its strategy pointing out that its market share has gone up and it has become competitive.
In the period April 2010 to February 2011 Air India carried more passengers, increasing seat occupancy on the domestic network to 71.4% from 70.2%.