Cheap Air Tickets: Are These The Opaque Fares?

The recent crisis of the Kingfisher Airlines and the frequency of cancellation of flights have made the customers go away from it. Even if the seats are available, the credibility of the airline is at such a nadir that the people are wary of travelling on it. Now, the online travel portals that are already having a lot of tickets stock of this troubled airline need to off-load these in some way. With customers not even looking at the cheap air tickets from this airline, what is the best possible way of off-loading the same? This is where the online travel companies make use of the opaque fares method. It is called so because the travelers are told the name of the airline only after they purchase a ticket. 

But, how do they get the customers to go for these tickets since the airline name is not revealed before the ticket is bought? This is done by offering these tickets at heavily discounted prices which help in luring the customers. For the passengers this is a gamble worth risking since the flights can materialize for that day and the customers can get to travel on domestic or international flights in a real cheap way. However, this is an equal and a more probable chance that the flights may not materialize since the airlines already has a history of cancellations.

Besides this risk for the passengers, there is also a good chance that the other competing airlines might not like this strategy since these are considered to be unfair trade practices. The other airlines might also raise their voice against this type of strategy which is non-transparent and can hurt the other airlines by taking away customers from them. This could even be seen as a collusion of the online travel agencies with a particular airline to offer cheap international flights.

Another danger is that this method might even erode the reputation of the online travel companies, since the customers may not like the idea of being offered cheap air tickets of an airline which they do not like even if they are lured into it. 

Cheap International Flights And Economic Growth

Air travel is the fastest mode of travel. The increase in the air-traffic bears a direct relation to the economic growth of the country. Growing economies require not only greater interaction of people domestically and internationally, but also a more frequent interaction as well. For facilitating this, the air travel is the best suited mode of transport, even though there are sufficient road and railways corridors of travel as well. For making this mode of travel possible, there is a need for the expansion of the infrastructure which can adequately handle the air traffic in a growing economy. With the growth of their operations, it becomes possible for the airlines to provide cheap international flights due to the overall economies of scale being possible.

Growing economies develop the airports in new areas where the growth is to be focused. By doing so, it opens up an altogether new market for domestic and international aviation, facilitating quicker movement of goods and people. The same is also achieved by the expansion of the capacities of the already existing airports. The creation of this infrastructure has its own operational and capital costs and, if the flights from these destinations have to become viable, then there has to be a correct assessment of the increase in air traffic demand. Another important aspect which affects the growth of international flights in a new sector is the way its capital costs are spread out over a period of the next few years. If the charge is heavy, no airline would be willing to fly in the segment since offering cheap air tickets becomes practically impossible for them.

By creating a viable infrastructure, it becomes viable to offer cheap international flights to these areas and speed up the growth process since less ticket amount can mean generating the latent demand for air travel. While it is true that the development of the modes of transport helps in stimulating economic growth and development of the region, the air travel helps in achieving it faster. However, air travel shall not discount the need for road and rail based transportation networks in the region since the latter have their own advantages.

Cheap Air Tickets: The Road Ahead For Indian Aviation

Just how much can cheap air tickets go cheaper further? This is one question which has many answers. While some would point out the already rock-bottom prices which the airlines are hitting and are somehow sustaining in this competitive market, some would suggest that there is still much scope left in tapping the market potential. And, as is the natural expectation, as the market potential is to be realised, there is a chance that the prices will come down further.

IATA studies on the aviation sector in India have identified that there is a potential of creating a market of around 700 million air travellers, if there is an increase in the frequency of air travellers in India. The realisation of this potential would require the massive development of infrastructure, addition of capacities and having a re-look at the taxation aspects. The prevalence of high rates of taxation on the aviation fuel has been one of the major impediments in the way of airlines in offering cheap international flights as well as further lowering the prices on domestic air tickets.

Taxes do play an important part in the cost of operation of airlines. The global average is 32 percent of the total cost, while for India this average is about 45 percent. Considering that the jet fuel prices make for almost half of the operational costs of the airlines, it becomes the single most important head of expense which can make an impact on the cost of air tickets. In India, there is an excise duty of 8.24 percent on all jet fuel and the different states impose their own fuel taxes, to the extent of up to 30 percent.  The high taxation rates are seriously hampering the players in the domestic aviation sector, many of which also operate the international flights.

Next, the lethargic pace at which the infrastructure development is happening is adversely affecting the speed with which the market potential can be realised. Further, the way the expenses incurred in the development of infrastructure are sought to be dispersed over a period of only two years, is going to make airlines operations at the airports a lot more costly.

Thus, there is no denying the fact that there is a scope for the further reduction of prices of the present cheap air tickets provided that the efforts are made to realise the market potential, be pragmatic in approach for distributing expenses over a number of years and there is a lowering of the taxes on aviation fuel.

Reasons For Kingfisher Getting Into Red

It is quite an irony that the seats on Kingfisher were available but there were no takers even on the discounted prices. Such is the level of distrust developed with this airline which, ironically, has been the recipient of the prestigious 5-star rating from Skytrax that the people are not sure on whether the fights will take-off or not. The reasons which led the people not to buy cheap air tickets from Kingfisher are essentially related to the long continuing financial woes of the company which has dug into the comfort-level of the people with the airline. Here is a brief but comprehensive assessment of what led to its seemingly unmanageable financial woes:

1.    Unprofitable History: Kingfisher has never registered an annual profit ever since it entered the market. This made its losses sting it even more. The other competitor airlines were far more comfortable since they had some booked profits from the yesteryears.

2.    Acquisition of Air Deccan: In order to capture more market share and embark on international flights operations without waiting for the mandatory 5 year period of operation on domestic sector, it acquired the Air Deccan which had completed the five years into operations. This made it run into losses for years.

3.    Exchange rate of rupee: Most of the airline expenses, to the tune of 80 percent, are incurred in dollars. So, when rupee deteriorated, it inflated the expenses bills considerably.

4.    Rising fuel costs: The times when the fuel costs were rising in 2011 were also the times when almost all the airlines were in red, reporting losses. Fuel costs make for about 40 percent of airline costs and a steep appreciation in prices which is not possible to be absorbed into the price structure immediately, inevitably leads to reporting of losses.

5.    Wrong business model: Experts also point to the wrong model of business adopted by the airline. From the beginning, it has adopted a stubborn stand of attracting the high-end customers by providing luxury services despite the fact that Indian customer is price sensitive. So, while its competitors have fared well as low-cost carriers, it was not able to devise any such road-map to profitability.

6.    Heavy debt burden: To tide over one financial woe after the other, the airline sought more funds from the banks, its main lenders, leading to the piling up of huge debts. With no profits, the interest burden and other expenses were getting higher leading to the deterioration of financial health. 

How Maturity In Aviation Market Leads To Cheap Air Tickets Becoming Dearer?

There is no dearth of statistical evidence which shows that the low-cost carriers, the LCCs, cannot maintain low prices for their cheap air tickets for all times. In the beginning, when the market is not yet fully developed, there are not many competitors in the market and there is scope for cutting down on prices as competition rises. However, with the development of the market and the entry of optimal number of players, there is a bridging of the demand and the supply, which leads to less scope for maneuverability in offering cheap international flights.

This is what is happening in Europe where the LCCs, operating on short-haul segments, find that the prices cannot go down forever. With most of the route segments already being served by an optimal number of players, there is not much space of expansion for LCCs and this bridles their growth. Add to it an escalation of the price of the fuel and it becomes inevitable for the airlines to increase the prices of tickets. Maturity of market is also dependent on the size of the country. So, smaller countries of Europe (land and population wise) are likely to attain maturity quickly as compared with the big countries (land and population wise) such as India.

While this is the impact of maturity of markets on the increasing prices of the LCC tickets, the network carriers, too, have their own impact on the air ticket prices. By virtue of their scope of operations and a number of value added services provided to the customers, these are able to absorb the increase in fuel price much better than the LCCs and therefore, might not increase their prices proportionately. Further, if the network carriers adopt a considered approach to reduce prices on the lines of LCCs, there is a further lowering of the price gap between their price and the LCC tickets.

This trend of reduction in the gap between the tickets prices of network carriers and LCCs offering short-haul international flights is quite noticeable in Europe and America and the same has been largely attributed to the markets attaining maturity. 

Why OTAs Are The Best Bet For Getting Cheap Air Tickets?

Airlines follow a complicated pricing structure which is dependent on a number of factors. Besides the operational and maintenance costs, the airlines also factor in the demand and supply for different sectors and timings, expected future demand levels, the level of competition and the need for meeting the various regulations of the government.

For this reason of a number of factors having impact on the airline prices, there could be a variation in the ticket prices on daily or even on hourly basis. Though it is possible to make advance booking of the cheap air tickets at pre-determined rates, the prices do vary from one day to the other. For the common customer, it is not easy to negotiate the best prices or deals on domestic or international flights with the airlines. If it were not for the market forces and the level of competition among the service providers, the airlines would charge the rates at their own free will. This is where the online travel agencies (OTAs) come to the help of the customers.

OTAs work on negotiated rates with the airlines. They have their commissions fixed for giving business to the airlines. By offering discounts to the customers from their commissions, they are able to provide cheap international tickets to the customers. Further, they have the price-arrangement with a number of airlines which gives them the leverage for getting the maximum possible discounts from the airlines. Further, OTAs give good volume of business to the airlines. They are the crucial intermediaries which ensure that the customers are not taken for a ride by the airlines and the international flights tickets are kept reasonable.

The online travel agencies also hold advantage over those agents who are not using the internet media for doing business. The use of online media makes it possible to reach out to different target markets while the ones who do not have the online presence have their scope of working limited geographically. Even for the customers, it is convenient to speak to or contact one credible source and get the pre-negotiated deals rather than negotiating rates with different airlines. So, the OTAs are uniquely positioned to deliver the best deals on cheap international flights to the customers. And, for this reason, these are successfully doing business by winning the customer confidence. 

Role Of Operations And Market Research For Offering Cheap Air Tickets

Airlines do try to define an optimal pricing strategy which, even if difficult to implement in practice, can give reference points for varying the prices as per the changing variables. The emergence of low cost carriers for short-haul flights all over the world has, in fact, been instrumental in changing the pricing structures and strategies of not only the domestic but also the international flights. All those flights which can take you to your destination in a span of a few hours, say less than 2-3 hours, are good cases for being positioned as low cost airlines.

There is a great deal of mathematical and statistical modelling and analysis which makes it possible for the airlines to redefine their pricing strategies and structures as per the changing times, offering cheap air tickets to the end-customers all the time and remaining profitable. Cheap international flights have been made possible by operational, strategic and structural changes in the industry.  Operations research has helped in the following ways in offering the cheap tickets:

1.   Carrying out quantitative and qualitative research on the patterns of current and expected passenger flows. This forms the baseline for pricing structure.

2.   Research on the new routing patterns and effect of various operational parameters such as different stop-over destinations on the operational efficiency of the airlines.

3.   Scheduling of the airline flights for different times of the day and for different days of the week depending on the current and expected demand for flying on a particular segment of travel. This rationalization of scheduling helps in apportioning of airline resources judiciously which prevents inefficiencies of operation.

4.   For the international flights, the market research on passenger demand and motives of travelling, be it business, leisure or any other, also helps in delineating a favorable price structure.

It is a fact that in the absence of the proper market research data on multiple aspects, it is not possible to devise an operational strategy which is beneficial both for the customers as well as for the airlines. So, the cheap air tickets that you get today has resulted from years-long process of research and forecasting. 

Tips For Searching The Cheap Air Tickets

There are many resources which can be used for comparing the prices of the air tickets. These could be online or offline resources, the travel agents or the airlines and a number of other independent resources that can enable you to search for the cheap air tickets. However, when you will make the searches using different resources, each resource will have a different price for the domestic or international flights for which you want to know the details. Therefore, there is a need to know what makes a particular service provider more expensive than the other. Of course, there is an element of added commission which increases the prices but you need to find whether there is an addition of some value to the services to make your travel more comfortable before, during or afterwards.

Here are some of the tips for making the searches of cheap international flights:

1.   Make a broad selection of service providers to search for the cheap flights.

2.   Do not fall for the cheap air tickets at the first instance.

3.   There is a need to look into what are terms and conditions for the special offers and deals as well as the services and amenities provided on the flights. Often, the fine print holds the sting. So, you shall never ignore the reading through the same. Sometimes, when the deal is too good to be believable, there might be some associated services or amenities which are priced unusually higher. Therefore, it is better to be prudent.

4.   Check what different amenities or services are being provided by the service providers who are charging you a more sum. You need to be sure on whether these additional services are required by you or not.

5.   Search through the news regarding the airline which is offering cheap air tickets. This is one aspect which I find particularly helpful since if there is some airline which is offering cheap international flights to attract more customers since it is not doing well, the same can be known by searching through the news items related to the airline.

These are some of common things which can be done to ascertain whether the cheap international flights are worth

 going for or it is better to pay a bit higher price. 

Why Travel Solution Providers Offer Combined Packages Including The Cheap International Flights?

It is not surprising to find that the travel solution providers, be it the companies engaged in providing modes of transportation or the accommodation facilities, now also strive to provide a complete set of travel solutions to their clients. For this reason, one can find that the airlines also provide the hotels booking as well as the holiday packages, besides providing the cheap international flights. Similarly, the hotels websites commonly feature the car rentals as well as the sightseeing facilities for their guests, not just the accommodation.

So, what was earlier the domain of the online or offline travel agencies which were primarily focussed on meeting the ends of the varied travel needs of the people, is now being captured a number of other travel solution providers as well. This has been the result of the increasing competition in the industry and a need to devise the cheap travel solutions for the people. So, the concern is just limited to providing the cheap air tickets or cheap hotel rooms but to bring down the overall cost of travel of the person. This is dependent on ascertaining the needs of the travellers. A business person looking for the cheap international flights will, in most of the cases, look for accommodations as well but might not opt for vacation packages whereas the vacationers will go for complete packages including transportation, staying places and sightseeing. There will also be people who are going to see their near and dear ones and would therefore need only the flights.

Depending on these varied travelling needs of the people, the online travel agencies (OTAs) and the airlines create the products and packages, such as only domestic or international flights, only hotels (in case customers book flights somewhere else), flights and hotels (for business travellers to different destinations) and, lastly,  the complete vacation packages. This serves two important purposes for the customers. First, they do get the better overall deals making them save or travel better. Second, they do not have to look for different providers for different segments of travel and waste time in endless searches. So, these packaged products are cheap as well as convenient to use for the customers.

For the service providers, this type of packaging of travel products gives them a better chance of marketing their products. If some service provider lacks in one respect but has a stronghold in another service then combining the two can stand him a better chance of marketing the products to the customers. 

High Demand Factors Which Can Deny You Cheap Air Tickets

The prices of the air tickets are dependent on the demand factor. While there could be a number of other factors impacting the tickets pricing, it is the demand factor which is the foremost determinant of prices on a particular sector for an airline. The demand factor is closely associated with a number of other factors such as the prevailing season of the destination during the period of travel, the number of sightseeing attractions, the nature of activities to indulge in and the types of facilities available. Your search for cheap international flights for vacationing, therefore, has to consider a number of factors.

Seasons Matter

It is quite common for the people to spend their summer vacations in hill stations and winter vacations on the beach side resorts. For this reason, the popular seasonal tourist destinations of the world generally have high demand during their peak seasons. If you, too, would like to vacation at the same destinations, then booking international flights to these destinations well in advance (preferably months in advance) could be the better way of getting cheap international flights.

Special Times

If you are planning your holiday for a particular time during which there are likely to be festivities or some cultural festivals at the destination, then there are less chances of getting the cheap air tickets. These special times could be religious occasions, carnival times, cultural fests, trade fairs, international conferences, sporting activities and other such occasions during which a particular destination is in high demand. There are good chances that the tickets are not open for booking well in advance for travelling during those times or they are pricier than expected.

Time-Dependent Tourism Arrangements

Some destinations which are totally or substantially dependent on tourist inflow during the peak season might not have the same level of tourist infrastructure during the lean season. These destinations have the make-shift shops for food, clothing, souvenirs and many other things coming up during the peak tourism season. Further, there could be temporary arrangements of entertaining the tourists coming up during this season.  However, many other destinations have the tourist infrastructure developed and functioning for all times of the year. So, some destinations have their attraction only for a particular time of the year. Travelling for these peak times could be a more expensive affair than at other times of the year.  

While the tourist destinations might hold greater attraction during some particular time of the year, you can grab cheap air tickets for the lean season of these destinations. You might miss out on the frenzy of the special events and times but can relax, rejuvenate and save good money on overall cheap holidays.