New entrants, old policies set stage for price war

New entrants, old policies set stage for price war

TOKYO - India's airline industry finally had some good news with the entry of AirAsia and Singapore Airlines into the market. But with six companies expected to make inroads into the country this year, there are signs that another price war is on its way.

Airlines are already slashing ticket prices and stepping up their service, and the Indian government is reviewing regulations for entry into the international flight business, which have been the target of heavy criticism. A number of issues remain unaddressed, however, including taxes on jet fuel and airport charges, both said to be the highest in the world. Whether India's airline industry will be on track for solid growth hangs in the balance.

Last June, the Tata group returned to the airline business for the first time in 61 years through its joint venture with AirAsia, Asia's largest budget carrier. In January, it started operating a full-service airline company under the Vistara brand by joining forces with Singapore Airlines. The Ministry of Civil Aviation gave the green light to the entry of six companies, including Turbo Megha Airways and Air One aviation, last year. Turbo Megha is expected to start domestic flights under the TruJet brand as early as by the end of April.

With its business turnaround in sight, budget carrier SpiceJet started offering one-way tickets for 1,499 rupees ($25.96) to get a head start on potential newcomers. It even offered tickets for flights on some routes in the July-October period at 599 rupees. GoAir, another budget carrier, gave customers a special discount for three days in March, offering an across-the-board price of 999 rupees for all flights scheduled between June and October.

Full-service airlines, meanwhile, are trying to avoid a price war by focusing mainly on business customers. "(We) will never go into a ruinous fare war," said Giam Ming Toh, chief commercial officer of Tata SIA Airlines, the operator of Vistara.

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