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Airlines lure passengers with low fare, incentives

Airlines lure passengers with low fare, incentives
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First Published: Sat, Feb 07 2009. 12 51 AM IST

Updated: Sat, Feb 07 2009. 12 51 AM IST
Mumbai: India’s airlines, travel companies and websites are pulling out all stops to bring back passengers and stimulate demand.
Some are sticking to the old formula of low prices: GoAir is leading that pack by offering a base fare of exactly zero. Others are providing other incentives such as freebies and insurance cover.
Airline firms usually do not include taxes and surcharges in the base fare. These levies vary on airports of departure and arrival; on the Delhi-Mumbai sector, for instance, they would be around Rs2,500.
High ticket prices—mainly due to higher jet fuel costs—and an economic slowdown has led to falling air passenger numbers. In the December quarter, they fell 18% compared with the same period a year ago.
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As a result, domestic airlines are posting heavy losses. For instance, Jet Airways (India) Ltd, the country’s largest carrier by passengers, reported losses of Rs236.18 crore in the December quarter and its closest private sector rival, Kingfisher Airlines Ltd, posted Rs626 crore in losses for the same period. India’s carriers are facing an estimated Rs8,500 crore in losses in the fiscal year that ends in March.
Jet Airways, for example, is offering a home insurance package against fire or burglary, while passengers are away from home. The airline has tied up with ICICI Lombard General Insurance Co. Ltd for the campaign, which will be available to all fliers. This is in addition to compensating for delayed baggage, flight delays due to fog and even medical expenses for the duration of the flight, beginning when a passenger checks in.
“We believe that there is more traffic which is available at lower fare levels. Obviously revenue maximization will be our goal in which scenario...we might even take up 15% yield drop, so long as it over-compensates in terms of higher traffic,” said Wolfgang Prock-Schauer, chief executive officer (CEO) of Jet Airways.
Kingfisher Airlines has an all-inclusive fare starting at Rs885 between Nashik and Mumbai and Rs883 for the return.
To be sure, most such deals are available only on online bookings.
Travel websites are also coming up with packages that they hope will pull people: iXiGO.com, a travel site based out of Gurgaon that, like others, allows fliers to search and compare fares, is assuring passengers of a gift—including airline tickets and T-shirts—for booking Jet Airways’ tickets through it.
“We are...associating with other airlines for similar schemes whereby passengers will be getting gifts by sending their PNR (passenger name record) numbers to us. The only condition is that they should navigate to respective airline’s website through iXiGO,” said Aloke Bajpai, CEO of iXiGO.com.
“For airlines, cost of acquiring a customer is lower when it is done online,” claimed Dharmendra Yashovardhan, chief operating officer with iXiGO. After first abolishing a 5% commission to travel agents on each ticket sold, airlines backtracked in the face of opposition, and in late December, agreed to a 3% commission.
A city-based analyst with a domestic brokerage, who declined being named because he is not authorized to speak to the media, said airlines will have to stimulate demand by lower ticket prices.
“Airlines may have to continue with these stimulating fares till a passenger believes low fares still exist.,” he said. “To add (passengers), airlines are also encouraging direct booking through websites.”
Others also have such promotional offers. For instance, online travel agent MakeMyTrip India Pvt. Ltd is offering four domestic tickets for every international ticket bought from them.
Not be left behind, travel company Cox and Kings India Ltd is offering three options for travellers. “We have come out with...(a) ‘Thrice As Nice’ offer, where a customer can either take 45% cash back, or a free add-on holiday, or free goodies,” said Karan Anand, head, relationship and supplier management. “By providing value-adds, we are encouraging travellers to go on a holiday. With the ATF (jet fuel) prices coming down, airlines have also slashed fares. This makes travel packages cheaper.”
January through March is typically a weak quarter for airline companies, coming as it does just after the holiday season and just before summer, for when most internationals packages are booked.
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First Published: Sat, Feb 07 2009. 12 51 AM IST
More Topics: Airlines | Passengers | Fare | Incentives | GoAir |