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EXCERPTS
The Deal
In 1999, the ministry of civil aviation said that it was willing to consider an agreement between VA and A-I that would benefit both carriers. The agreement was to include a code-sharing arrangement or sharing of A-I flight quotas.
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The entry of VA on the London-India routes was likely to bring down the fares on the sector. In December 1999, VA signed an agreement with A-I to fly three services a week on a code share basis between Delhi and London from July 2000. The arrangement with A-I was for five years and apart from the initial three flights a week, frequencies, it had agreed to give away the remaining three to V-I by 2001. VA and A-I would share seats on each other's routes and VA would operate flights to the UK on routes not covered by A-I. VA would also fly on days that were not flown by A-I. Under the terms of the agreement, flights would carry both VA and A-I flight numbers, and both airlines would sell seats on those services in competition with one another...
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Who Will Rule The Delhi-London Skies?
Analysts felt that with the entry of VA, the Indian skies would see some fierce price wars between VA and BA. Branson said that VA's first class fares would be equivalent to the business class fares of BA and that the economy fare would be 30-50% cheaper than BA's.
If BA brought down ticket prices as it had done in May 2000, VA would fly
for less, Branson said.
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Since BA had proposed a fare of about Rs 27,000 on the Delhi-London sector, Branson said VA would file an application with the GoI for a lower fare. At the same time, VA would respect the Government's sentiments on fares, since it was a regulated market, Branson said. In June 2000, VA announced that it would start its operations in India in July with a bi-weekly service-Wednesdays and Fridays from London and Thursdays and Saturdays from Delhi. VA planned to launch a third weekly flight around October. The airline would offer low introductory fares. Mackenzie Grant, VA's general manager for India said the initial fare was still being worked out and that it would be difficult to give a comparison with competing airlines... |
Excerpts Contd... >>
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