Mumbai: More and more low-fare carriers in India are planning to team up with insurance firms to offer travel insurance to passengers for flight delays, trip cancellation and baggage loss.
New Delhi-based low-fare carrier SpiceJet Ltd, which operates 100 flights connecting 18 cities with 18 aircraft, was the first to tie up with Tata AIG General Insurance Co. Ltd to cover travel related risks of the airlines’ domestic passengers.
Taking a cue from SpiceJet, low-fare carriers, such as GoAir, operated by Go Airlines India Pvt. Ltd, and Simplifly Deccan, run by Deccan Aviation Ltd, are also planning to tie up with insurance companies to offer travel insurance.
Cover drive: Taking a cue from SpiceJet, which was the first to tie up with an insurance firm, other low-fare carriers such as Simplifly Deccan and GoAir are also planning to offer insurance cover to passengers. (Photo: Madhu Kapparath/Mint)
Another New Delhi-based low-fare carrier IndiGo, run by InterGlobe Enterprises Ltd, is also on the lookout for a suitable insurance company partner.
Apart from low-fare carriers, online travel agents such as Yatra Online Pvt. Ltd, which runs Yatra.com, and MakeMyTrip.com are also offering travel insurance products.
Tata AIG’s travel insurance business head Khalid Sohail said, worldwide, all low-fare carriers are opting for travel insurance and his company is in talks with more low-fare carriers to implement these travel insurance products.
“The average percentage of passengers opting for travel insurance product while buying tickets online is 28%. In terms of number of claims received, flight delays top the list, while, in value terms, accident death claims are the highest,” Sohail added.
According to him, online travel agents such as Yatra.com and MakeMyTrip.com are also witnessing the same rate of insurance acceptance.
Executives from GoAir and Tata AIG confirmed that they are joining hands for a travel insurance product, but Deccan refused to name the partner. It also declined to divulge the details of the insurance products. Announcements of these tie-ups are expected shortly.
“We are looking at offering various services to our passengers, but I cannot share that at this point of time,” said a Deccan executive who did not want to be named.
Under SpiceJet-Tata tie-up, the insurance cover would be provided for accidental death, emergency medical treatment, trip cancellation, baggage loss, flight delays and trip interruption among others for a premium of Rs129 for all tickets booked online.
“The entry of low-fare carriers has revolutionized the travel industry and there is ease of marketing such products. With the system integration with airlines’ or online travel agents’ distribution, we can offer travel insurance products on real time basis,” Sohail pointed out.
A passenger must be at least two years old on the date of the travel and the maximum permissible age to be eligible for the insurance cover is 75 years.
Special consulting firm Centre for Asia Pacific Aviation has projected that the low-fare carriers’ market share in India will reach 70% by 2010, making it one of the world’s leading low-fare carriers markets in terms of total market penetration. In 2007, low fare carriers including Deccan, SpiceJet, IndiGo and GoAir, carried 38% of the total passengers.
“Insurance is not just a financial incentive. It is also an added attraction for the passengers,” said Siddhanta Sharma, chairman of SpiceJet.
Samyukth Sridharan, chief commercial officer, SpiceJet, echoed the sentiment, saying passengers are seeing significant relevance for travel insurance products of his airline.
“The original estimate was 8-10% passengers will opt for travel insurance, but now, over 20% passengers are buying insurance,” Sridharan said.
Under SpiceJet insurance policy, the benefits such as trip cancellation begin right from the time the policy is bought and covers the passenger against cancellation of tickets under specific circumstances such as hospitalization and death of passenger, her co-passenger or family members.
For accidental death, the insurance cover is Rs7.5 lakh and for emergency medical treatment the cover is Rs1 lakh. For baggage loss, it is Rs7,500 and for flight delay the passenger is paid Rs1,500 per six hours up to a maximum of Rs10,500.