The airlines in India are currently having a tough situation to handle. They are currently flying through rough financial weather. There is a possibility of further hit by a fresh round of price cuts by low cost carriers. The low cost carriers are attracting customers with deep discounts. The full service airlines are against the low pricing model. They are asking the government to intervene and introduce discipline in the pricing strategy in this sector.
GoAir and Spice Jet is likely to offer airfares that are going to be as low as Rs. 0-99 as the basic fare. Since, the off peak season will be taking off between July and September, airlines are getting ready to fight yet another hurdle. It’s about the hurdle of low passenger load factor. Passenger load is expected to come down, anywhere from 10 per cent to 15 per cent. The air fare of the tickets are being offered with basic fares as low as Rs. 1-99. The low cost carriers feel that this strategy will get them bookings and rake in enough cash to stay some what stable. But many others in the industry do not like this type of pricing strategy.
The full service airlines say that there must be some rational pricing happening with regard to the airfares. They are against of the method of someone selling tickets at a lower price than it actually should be. They feel that this low fare strategy hurts the airline Industry and has a cascading effect on the economy. This pricing would result in such huge losses that in the long run, a couple of the low cost carriers themselves have to pack up or sell-off. Such low fares strategy will not be helpful in the long run.
So the Gist of the post is avoid Aviation Sector for investing. :p