Dubai, Jul 24 (UNI) High airfare during summer rush months and rising cost of living keep most travellers at home in the once busy Gulf India sector and airlines are forced to consider price cuts to meet over capacity.
The Indian Airlines was the first to offer a 20 per cent cut in airfare last week at a time when airlines were hiking prices to meet the higher cost of fuel. Air India followed the same route in a desperate move to attract more travellers.
Dubai today announced tourist visas to all nationalities, including India apparently in a move to counter dwindling demand for airline tickets and low hotel occupancy rates.
India is a major source of tourists for the Gulf countries, particularly the UAE.
However, the premium airline Emirates of Dubai raised prices by 10 per cent to meet the fuel costs.
Salem Obaidullah, Senior Vice-President for the Indian Subcontinent, Emirates Airlines, said capacity reduction is not in the cards as the airline did not face any drop in demand.
''With our extensive route network and flexibility of operations in the India sector, we believe we are well entrenched,'' the Khaleej Times quoted him, as saying.
Cutting fares at a time when air fares are rising worldwide as fuel costs surge by 65 per cent in 12 months may not make sound business sense.
Indian Airlines' regional manager for the West Asia and Africa Abhay Pathak said it was the better of the two options - either downsize operations or get more passengers to reverse the shrinking traffic.
Harish Kutty, head of Networks, Air Arabia, said cutting fares to tackle surplus capacity is not on their agenda, adding ''We don't believe the issue can be addressed by lower fares''.
While most players are facing the dilemma of scaling down frequencies or increasing fares, Etihad Airways said it will add two more routes, to Chennai and Calicut, next month.
Air India's manager in Dubai Jaishree Ramchandran said an increase in capacity by 14,000 seats per week on the Gulf-India sector has resulted in extra capacity, while K Raveendran, CEO of RAK Airways, said price-cutting is not a tool to fight overcapacity.
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