Air India’s discounted fares are partially to blame for the current problems being suffered by Kingfisher Airlines, according to domestic rival Jet Airways.
Jet’s Senior Vice President of Finance, M Shivkumar, told Bloomberg this week that the national carrier’s policy of cutting fares despite adverse market conditions has caused huge difficulties to Air India’s rivals.
“Air India is discounting fares and that’s absolutely a problem,” told the US-based news channel in an interview on Wednesday. “Ideally, fares should go up when oil-import costs go up. That’s not happening and that’s why airlines are in this situation.”
Air India has also been unprofitable since its 2007 merger, but has succeeded in winning INR32 billion of bailouts from the government, and is seeking an extra INR65 billion.
Kingfisher meanwhile, announced losses of INR469 crore in the quarter ending 30 September 2011, adding to an estimated INR63 billion combined loss suffered by Jet and Kingfisher over the past three years. The government recently said it would not offer financial assistance to Kingfisher.
Air India has denied offering unrealistically low fares, with a spokesperson saying that its “prices are determined by market forces”. All airfares need to be submitted and approved by the Directorate General of Civil Aviation.