The Telegraph
Wednesday , January 29 , 2014
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Jet takes flight from Bangkok fare battle Jet gets the jitters

- Lack of corporate fliers in ‘crowded’ sector forces airline to join AirAsia in exit queue

Jet Airways is withdrawing its full-service flights from the Calcutta-Bangkok sector in the face of stiff competition from low-cost rivals.

Barring a last-minute change of heart, the airline will go off the route in April to become the second airline after AirAsia to ground Calcutta-Bangkok flights this year. AirAsia, a low-cost carrier, is also planning an April exit.

“Our yield is very low, making the route unsustainable for a full-service carrier,” a source in Jet Airways said. “Fares are down from what they were two to three years ago because of low-cost carriers in the fray.”

Jet’s operational costs have shot up by 30 to 35 per cent over the past two years, sources in the aviation industry said. The need to marginally cut fares to keep up with the competition has bled the airline further.

The average return fare in this sector was in the range of Rs 14,000 to Rs 16,000 in 2011-12. In 2013-14, the average return fare offered by most airlines has been between Rs 12,000 and Rs 14,000.

But two airlines withdrawing together could trigger a fare hike because of 40 per cent fewer seats on offer. Currently, 1,120 seats are available daily on Calcutta-Bangkok flights.

After IndiGo and Bhutan Airlines jumped into the fray, a subsidiary of Tashi Airways started a Calcutta-Bangkok service, triggering a new price war that has hurt full-service Jet Airways badly.

“Increase in airport charges and aviation turbine fuel prices have led to the rise in our operational costs. The depreciation of the rupee has added to the burden,” a Jet official said.

Jet Airways had started its first daily flight between Calcutta and Bangkok in January 2007. It added a second flight in mid-2012.

If Calcutta is no longer a viable choice for a full-service airline, Jet’s Bangkok flights from Delhi and Mumbai are apparently doing well because of corporate travellers who find connectivity with the US and Europe from there convenient for business trips.

Metro has highlighted on several occasions how lack of industry — and the corresponding dearth of corporate travellers — is chasing airlines away from Calcutta even as short-haul international operations from India have increased by 10 per cent.

Short-haul sectors are routes that flights take less than five hours to cover.

“The rise in passenger traffic on short-haul routes has been negated by stagnation in the long-haul sector,” said Kapil Kaul of the Centre for Asia Pacific Aviation.

Aviation officials blame “market saturation” for even a highly profitable sector like Calcutta-Bangkok becoming the graveyard of full-service airlines.

Around 800 of the 1,120 seats on offer every day on flights from Calcutta to Bangkok are sold on an average. “The occupancy rate isn’t bad. It shows that Bangkok is still one of the more popular destinations from Calcutta,” an official of a private airline said.

Anil Punjabi, chairman (east) of the Travel Agents’ Federation of India, said 900 passengers daily would correct the supply-demand mismatch. “Airlines then won’t have to sell off high-yield seats at lower rates.”

The two Jet flights have 32 business class seats with average occupancy less than 30 per cent.