While the industry opinion is divided over the sustainability of unprofitable growth, which is primarily led by low fare, some described it as the resilience of air travel
against the economic slump.
“Looks like air travel
is an outlier. Demand was definitely stronger in November. Some of it was pent-up demand after the festive season. Two-wheeler companies
couldn’t revive growth in spite of heavy promotional sales. However, there are takers for air tickets despite capacity glut and if tickets are being priced at optimum rate, said an executive head of a private commercial airline.
However, some said that growth led by low fare should not be an ideal way to push demand. Anytime an airline operates a flight beyond 90 per cent occupancy, it is cannibalising profitability of its other flight, which is being sold at a little higher price.
Profitability is a hard balancing act. You don’t do it by selling cheap tickets and filling up planes, said a CEO of a low-cost carrier.
A few days ago, SpiceJet Chief Executive Officer (CEO) Ajay Singh had warned that selling cheap tickets might take airlines
to a similar financial collapse being witnessed by telecom companies.