Now In Price Contest With Private Carrier

At issue... nothing less than an airline's survival. Sad to say, but that's not really news these days - it's happening almost everywhere you look. But this time, an entire nation is pitted against a single, privately-owned airline.

India's stat-run airline, India Air, is battling Jet Airways for control of the skies - or at least, the terminals - on the subcontinent. Together, those two airlines dominate the air travel market in India, carrying 90% of the country's passengers. In a country as populated as India, that's a big market.

Of Course You Know, This Means War

"Normal growth is not happening. The total capacity (number of aircraft) has increased in the market. So it is a question of survival," said IA spokesman Ashok Sharma in an article published by the Arab Press.

"This year, when we saw the economy was not growing... because of the Iraq war... because of SARS and other factors, we thought we needed to boost the market," said Jet Airways chairman Naresh Goyal. So Jet Airways fired the first shot in a crushing fare war with India Air - dropping the price of a seat by as much as 60%. India Air quickly matched the sale and the airlines were suddenly engaged in an all-out price war. They're even going to the mattresses on the Internet, where they've both started auctioning tickets at a price of just five cents to bid.

"These special air fares can compete with second class airconditioned train travel. We are hoping to increase the number of air travellers," said one Jet Airways executive. Chairman Goyel said the situation is so grave that his company has deferred on the planned purchase of ten Embraer turbo-prop commuters."We believe in the equipment, it's a great aircraft, but we have delayed it for at least a year until the travel industry is on surer grounds. We will continue looking at new small places for tourists in the meanwhile," he said.

FMI: www.airindia.com, www.jetairways.com