Indo-EU Air Pact Could Trigger Fare War

ET&T Staff - Mumbai

The proposed unified aviation pact between India and the European Union (EU) may trigger a major fare war in the India-Europe airline sector. "The air fares to European destinations are already low. With skies opening up eventually, fares are expected to come down by another 20-25%," said Centre for Asia Pacific Aviation (CAPA) chief executive officer Kapil Kaul. The present economy class return fares excluding taxes offered by Air-India are Mumbai/New Delhi to Paris - Rs 26,900, Mumbai/New Delhi to Geneva - Rs 29,900 and Mumbai/New Delhi to Frankfurt - Rs 26,800. Today, Europe is a major revenue generator for tour operators across India. It contributes to as high as 40 per cent of the topline. "Europe is very important as an aspirational destination for Indians. A pact like this would increase passenger traffic by about 30 per cent. Increase in traffic implies further market expansion and enhanced outbound tourism," said Cox & Kings (India) executive director Arup Sen. This will also result in higher revenue for tour operators. "Topline could improve by another 20 per cent for the tour operators," said Indian Association of Tour Operators (IATO) president Subhash Goyal. However, it seems India is not prepared to face the scenario.