Why Jet isn’t doing a Spicejet with its ‘Million Sale’

Today is the last day for Jet Airways’ ‘Million Sale’.

The sale offered a million seats for a flat discount of 25% on economy travel across the airline’s domestic network. The offer was available from May 27 to 30, 2015 for travel between June 15, 2015 to October 15, 2015.

Indian travellers and travel agencies are digging it. Hear it from the horse’s mouth.

“These tactics offer unique fillip to inspire not just demand, but propel transactions and our impressive over 35% surge in bookings on thomascook.in, post the announcement by Jet Airways, is clearly a testament to this! While metros, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad continue to see momentum, tourist destinations such as Diu, Kochi, Dehradun, Varanasi have also been trending on travellers radar!”, Amit Madhan, COO, IT & E Services, Thomas Cook (India) Ltd says.

While Indian flyers are clamoring for more discounts, there have been speculations that Jet is going the Spicejet way with such flash sales. Many believe the industry’s seeing newer lows with full service airlines getting their hands dirty in the rat race for discounted fares.

An important thing to note here is that Jet has been doing well for a while. The company posted a Rs. 63.1 Crore profit while SpiceJet reported a net loss of Rs. 275 Crore in Q3 FY15. The latter got back to winning ways only very recently.

Also, the airline with its subsidiary JetKonnect commanded a sizeable 22.3% of the total market share in the third quarter of FY15. It comes second only to Indigo which topped the charts with 33.9%.

So what motivates well-off airlines to offer low prices? Let’s debunk a major airlines myth once and for all.

Flash sales can actually be a good thing from the airlines perspective as opposed to popular notion.

“Flash sales of air tickets are a good way to stimulate buying, bring in non-flyers and sell unsold seats which are anyways likely to remain unsold (eg non-peak hour flights)”, Amber Dubey, Head, Aerospace and Defence, KPMG India observes.

Basically, an airline offering sale doesn’t necessarily mean its tanking. Flash sales help stem losses by recovering fixed costs. Turns out is actually a handy tool if used sparsely.

“The flash sale period should be for 2-3 days. The travel period should be at least 30 days away from the date of the flash sale. Peak hour flights and the ones around festival dates are generally kept out. As long as the flash sale is planned prudently, it is a great tool to fill up empty seats, improve yields and to introduce flying to non-flyers in India”, Mr. Dubey advises.

But like they say, too much of anything is good for nothing. Offer sales too often, and it’ll eat into your revenues. It’s a fine line to walk surely.
Jet didn’t offer any comment. It currently operates a fleet of 116 aircrafts across 73 destinations across India and beyond. It is a partner of Etihad Airways.