The decision by Colombian carrier Aires to provide cut price airfares caused a stir in the commercial aviation sector. There is talk within the industry of the need for price-fixing because of fears that increased competition will damage the profitability of the sector.
While it is generally acknowledged that the move will be beneficial to passengers there are those who think that the airfare ‘war’ should have limits.
The president of state owned air carrier Satena, Hector Campo Plata, said that in reaction to Aires’ decision “there has been a frenzy to lower to prices, which been fits the customer, but there is no body to regulate this market, nor to fix a bottom price”.
Campo Plata believes that clear guidelines are needed including that “no body should be allowed to sell airfares below cost price”.
Satena has not opted for agressive a business strategy as Aires, but has come out with some seasonal promotional specials.
Avianca, another compeditor in the sector, said that the commercial aviation sector has contracted notably due to global economic recession. An Avianca representative said that price fixing would go against factors, such as taxes and fuel prices, that are not under the control of the airlines and that affect the prices of air fares.
Alfonso Riaño, a spokesperson for Aires, said “we are not lowering prices to the point where we are making a loss. We reduced prices because our operation allows us to”.
Aires is offering national flights for 60 per cent of their original price.