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Cut Down The Frills
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We do not need to look very far back to see how the gain of these low-fare airlines has translated into steady losses for Jet, Indian and Kingfisher. Jet and Kingfisher — while gaining passenger numbers through their purchase of Sahara and Deccan, respectively — have themselves been losing market share. Both have been saddled with a host of problems caused by the buy-outs. While offering low-priced tickets through Kingfisher Red, Jetlite and now Jet Konnect, both offer a large number of seats at much higher rates (there are anywhere between 110 and 140 economy seats on every aircraft, depending on the type).
Considering that food is now available in most of the metro airports and that for Rs 200-250, you can get a decent meal on the low-fare airline flights, I do not really see how the full-service airlines hope to sell their regular economy seats at Rs 1,600-1,700 more than the rate offered by a low-fare competitor. Flights within the country are at most two-and-a-half-hours long, so a large and growing number of people do not really feel the need to eat on the flight at all.
Add to that the problem of filling the front of the plane. Almost every Jet, Kingfisher or Indian flight has close to 20-25 seats in business or first class (Kingfisher roughly offers 1,500 first-class seats per day across domestic routes). While most of these operate on the metro routes, these airlines have non-metro routes that use the same aircraft with business-class configuration. Centre for Asia Pacific Aviation (CAPA) CEO Kapil Kaul says there are close to 120 aircraft with a two-class configuration flying in India today, way more than what is required.
On the Delhi-Mumbai route, for instance, the full service business class (return) fare is about Rs 45,000 against Rs 8,000-12,000 or so for full-fare economy. Of course, till recently, companies did not mind dishing out the extra amount for senior executives as the two hours could be used productively for work on one's laptop in a quieter business-class cabin.
But all this is changing at an alarming pace. A senior Jet Airways official says that not only are companies becoming more cost- conscious, the entire model of business communication in India is changing so rapidly that business class travel has been hit from both sides. Internet communication, mobile telephony, video conferencing and various other ways of linking up with colleagues and clients has reduced the need for face-to-face interaction.
Then, the standard of offering — both in business and economy classes of full service Indian carriers — is unmatched almost anywhere in the world. Internationally, most airlines do not offer the same kind of service even on transcontinental flights. Full-service airlines in the US typically "throw a burger and Coke" at passengers (even on coast-to- coast flights which can be up to 5 hours) and do not come back after the first service. Horror stories abound of how Indians (who are often vegetarian) have been told "this ain't a restaurant", when they have asked for something — anything — without meat.
Conversely, Americans and Europeans who come to India and happen to travel by Jet Airways or Kingfisher, especially on vacation, cannot believe what they see. Someone from Quebec I met on a flight to Mumbai said he could "spend his entire life flying on Indian carriers". He thought one of the Kingfisher attendants was trying to "whack" his baggage the first time he saw him swoop down to grab it; he couldn't imagine anyone offering to carry it for him.
It, therefore, comes as no surprise that all the three full- service airlines are struggling in this new environment. While SpiceJet and IndiGo are adding planes and routes, Jet and Kingfisher are wondering what to do with their existing planes. While the former two are hiring pilots and crew, the full-service carrier staff is getting more jittery by the day. And while the low-fare airlines are not exactly in clover, they are not keeling over under their own debts. Instead of borrowing more and funding inefficient operations, the full-service airlines will do well to re-look their basic models (Jet is already headed that way) and cut their losses. Sometimes the best gain is to lose.
anjulibhargava at gmail dot com
(This story was published in Businessworld Issue Dated 10-08-2009)