Fare War Erupts in Indian Skies: Singapore Airlines and AirAsia Engage in Competitive Pricing Battle

Strategic Insights -

In a move that has sent shockwaves through the Indian airline industry, Singapore Airlines has launched its sister carrier, SilkAir, on the Kolkata-Singapore route, offering a highly competitive return fare of Rs 30,000 for a couple. The low-cost carrier AirAsia has quickly responded with a 20% fare slash on 21 sectors off Bangkok and Kuala Lumpur. This multi-pronged fare war is likely to force other airlines, including Thai Airways, Jet Airways, Kingfisher Airlines, and Air India Express, to revise their fares if the competition continues.

Key Takeaways:

  • Singapore Airlines has launched its sister carrier, SilkAir, on the Kolkata-Singapore route, offering a return fare of Rs 30,000 for a couple, which is Rs 12,000 lower than the minimum fare prior to the offer.
  • AirAsia has responded with a 20% fare slash on 21 sectors off Bangkok and Kuala Lumpur, targeting first-time fliers who are new to international travel.
  • AirAsia has the lowest cost of operation in the world, which enables it to offer low fares and compete with full-service carriers.
  • The rival carriers Thai Airways, Jet Airways, Kingfisher Airlines, and Air India Express may be forced to revise their fares if the competition continues.
  • The fare war is reminiscent of the 2005 fare blitzkrieg launched by Singapore Airlines, Malaysian Airlines, and Jetstar Asia, which sent shockwaves through the industry.
  • The offer is applicable to both Singapore Airlines and SilkAir flights, with no intent to destabilize the market, according to Singapore Airlines general manager (India) GM Toh.

Statistics:

  • Return fare offered by SilkAir: Rs 30,000 for a couple
  • Minimum fare prior to the offer: Rs 42,000
  • 20% fare slash by AirAsia: Available on 21 sectors off Bangkok and Kuala Lumpur
  • Number of passengers traveling to a foreign country on their first flight: 20% (AirAsia estimate)
  • Cost of operation for AirAsia: The lowest in the world

Sources:

  • "Singapore Airlines launches SilkAir flights to Kolkata, offers return fare of Rs 30,000" - Times of India
  • "AirAsia launches 20% fare slash on 21 sectors off Bangkok and Kuala Lumpur" - AirAsia press release