Drop prices to stimulate demand

Rising prices, for whatever reasons, always affect cost-benefit analysis adversely. More so if the buyer's always looking for a bargain. The only way to get sales back on track is to lower prices. Leaner operations are called for, in such scenarios.

The airline industry in India is now faced with dropping demand due to rise in fare prices. ET reports that after two years of growing at possibly the fastest rate in the world, the number of domestic air travellers in India has fallen significantly in the past two months of December and January. Average growth in the past eight months had been above 30%, but December recorded a 14.8% growth in year-on-year terms.

Airlines, whose load factors have started falling as a result of the slowdown, are beginning to see the writing on the wall. Falling load factors have forced them to offer cheaper fares by opening their lowest fare-categories. Airfares are bunched in various fare-classes, and airlines typically try to sell at the higher classes, offering lower fare categories only if the demand is slow.


Popular Posts