Will Atlasjet Cut Prices for Georgian Market?
17 October, 2013
Will Atlasjet Cut Prices for Georgian  Market?
he third Turkish air-company Atlasjet started flights in October from Tbilisi International Airport to Istanbul, challenging competitors with its cheapest prices at the moment but the question is whether or not the company is capable and willing to hold prices down in a long-term prospect.
Having watched Georgian market for a year, Atlasjet, the number one private Turkish-based company, decided to start flights from Tbilisi International Airport to Ataturk Airport in Istanbul, one of the major transit airports for the
passengers flying to and from Georgia the globe over.
“We have been watching Georgian market for about one year. Considering the growth of the market and prospective growth capacity we have estimated, we decided that we should be on the Georgian market. We are a big tourism group, have 12,000 beds under three different brand names. And we think that it is a good market for cross benefit also in these terms,” President of Atlasjet Murat Ersoy said in the interview to Georgian Journal. According to him, Atlasjet will implement Tbilisi flights from Ataturk Airport with one-way price from EUR 50 including free meals, online check in and 30 kg baggage allowance for EconomiPlus passengers and round-trip tickets starting from EUR159. Business Class one-way prices begin from EUR 150 Euro. Atlasjet started flights on Tbilisi-Istanbul line from 2 flights per week and will implement daily flights starting this November. And as of April 2014, flights on route Antalya-Tbilisi-Antalya [four days a week] will be launched.
Atlasjet is a third company that entered Georgian market after Turkish Airline, an actual monopolist of Istanbul flights, and Pegasus that entered Georgian market in 2010 with prices as cheap as EUR 79 to challenge EUR 450 fixed by Turkish Airlines for almost ten years on Tbilisi-Istanbul flight before. Pegasus prices include all due air-flight-related costs [cost-free 20 kg hand-luggage] except food. However, the prices went high step-by-step and one can get just 5 tickets for EUR 79 by today, Giorgi Kodua, Head of Amalgamation of Civil Aviation Professionals of Georgia and Consultant of Air Caucasus, told GJ. After entrance of Atlasjet, Pegasus spokesperson said his company will keep prices lower than those of Atlasjet to retain passengers but Kodua paints pessimistic picture of price slumps on the expensive Georgian air-market. As a matter of fact, tourist agencies point at expensive air-flights to Georgia as one of the major barriers to tourist inflow and outflow. Cutting prices down might give an impetus to tourism. The President of Atlasjet did not comment on the issue whether or not their company is capable of lowering prices on the Georgian market. Kodua believes low price is just a marketing trick for Atlasjet to win the market against its main Turkish rivals on Istanbul flights and then prices will increase again after a while.
“All companies that entered Georgian market as of yet, started by cheap prices and jacked them up as time went, because economically reasonable prices on Istanbul flights start from EUR 150 and EUR 250 on one-way and round-trip tickets respectively, because the fuel is expensive USD 1000 per ton and both Turks and we buy the fuel plus airport service related and other costs,” Kodua said. “Most probably Atlasjet allocated some money to enter the market by EUR 50 but it cannot last for longer than 3-6 months because it leads to losses and in a long-run the company needs to increase prices to compensate the losses it faced during its first months on a new market.”
To avoid losses, Air Caucasus changed its decision to start Tbilisi-Istanbul flights this fall and will wait until the summer season hoping to see crystallization of market prices by then.
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