MUMBAI: Indian full service airlines, buffeted by high fuel costs and intense competition, face new headwinds on their lucrative international routes as budget carriers launch services with rock-bottom fares.
With low-cost carriers launching routes using narrow-body aircraft to overseas destinations within five hours flying time of India, full-service players are being forced to respond with similar no-frills offerings on popular and profitable routes.
Budget airline IndiGo, which in June firmed up a $16.2 billion order for 180 single-aisle Airbus aircraft, has received government approval to fly to Singapore, Bangkok, Dubai and Muscat, and is luring passengers with round-trip fares as low as 9,999 rupees ($220).
By comparison, full service carriers charge between 17,000 and 22,000 rupees for economy class Mumbai-Singapore routes booked a month in advance.
"The entry of IndiGo will help in growing the market. Low cost carriers are creating a new market with a new breed of customers who did not fly international earlier," said Kapil Kaul, chief executive for the Indian subcontinent and Middle East at the Centre for Asia Pacific Aviation (CAPA).
Under Indian aviation laws, an airline needs to locally operate for five years before being assigned overseas routes.
Indian low-cost operator SpiceJet , with just six international flights now among its 200 daily flights, plans to expand its overseas network and has applied for several international routes, CEO Neil Mills said.
"Low cost carriers are much better poised to take advantage of the growth, because India is a very price-sensitive market," Mills told Reuters.