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‘Indian airfares so low that airlines are not able to break even’

According to a senior Boeing official, fares in India are at least 10 to 15 percent lower than what is required by airlines to reach the breakeven level
New Delhi: Indian airfares are so low that it is difficult for airlines to break even, a Boeing Co executive said as the planemaker raised its long-term jet order forecast for the nation to a record despite market challenges. According to the aircraft maker, fares in India are at least 10 to 15 percent lower than what is required by airlines to reach the breakeven level.
Dinesh Keskar, senior vice-president, Asia Pacific and India sales at Boeing Commercial Airplanes, warned that the airlines need to observe more discipline in deciding fares in order to keep the business sustainable.
Major Indian airlines, like Jet Airways, IndiGo and SpiceJet, were in the red in the quarter that ended in September 2018 primarily because of rising jet fuel prices, a week rupee and an intense price competition forcing them to bring down the fares. Dinesh Keskar, senior vice-president, Asia Pacific and India sales at Boeing Commercial Airplanes, warned that the airlines need to observe more discipline in deciding fares in order to keep the business sustainable. “Double-digit growth coupled with losses is what I am concerned about,” he said. “I will forego 2 to 3 percent growth for making money rather than filling up my airplane at rock-bottom prices and never making money.” Keskar, however, added that the lack of profitability has not impacted the deliveries to Boeing clients, which includes the likes of cash-strapped Jet Airways and budget carrier SpiceJet. India’s passenger traffic has risen at around 20 percent in recent years, making it one of the world’s fastest-growing aviation markets, unfortunately, Indian airfares have not risen to keep pace with the growing market. Boeing expects India to become the third-largest commercial aviation market by the early 2020s.