Mumbai: Struggling domestic airlines are now selling holidays with tickets and creating separate brands to woo passengers
National flag carrier Air India Ltd intends to start a website under the Air India Holidays brand to sell vacation packages. Jet Airways (India) Ltd has announced special fares along with hotel rooms that it calls JetEscapes. Kingfisher Airlines Ltd, too, started Kingfisher Holidays, which was aborted as the carrier faces closure.
Even low-fare carriers are not left behind. IndiGo, the largest low-fare carrier and also the largest passenger carrier, has floated a holiday packaging division called Get Packing to offer affordable holiday packages to business, leisure and religious travellers. SpiceJet Ltd, another low-fare carrier, floated SpiceJet Holidays. GoAir has started GoTravel.
Passengers get an attractive deal through these airline-made holiday packages as fares constitute major cost in bundling a holiday product, said an executive of a travel firm, who spoke on condition that neither he nor his company be named.
“Since it is an in-house product, airlines will be able to give a lower bucket fare to woo passengers. Many travel firms are also joining hands with airlines to manage holiday packaging,” he said. By diversifying, airlines are trying to save cost and at the same time boost the brand and create loyal passengers.
The airline-managed holiday packages have not taken off as yet as the struggling carriers are not able to market the holidays products well, the executive pointed out.
Under holiday packaging business, an airline offers all-inclusive tour fares and its tour operating partner firm makes arrangements for competitively priced hotel inventory and ground services.
Air India had been scouting for a tour operator for its holiday package business for three years. It has a web-based business-to-business product to build packaged holidays. It is seeking to enhance the product to cover more destinations and options and offer the product through the business-to-customer model. The firm has recently floated a tender for this.
Last week, Jet Airways offered a special holiday package including return air travel in economy class, airport transfers, two-star hotel stay with breakfast, sightseeing and travel insurance. It is also offering holidays with accommodation at budget as well as five-star hotels.
Sudheer Raghavan, chief commercial officer at Jet Airways, said these holiday packages will help boost domestic tourism opportunities for the country and revenue for airlines.
“In India, only less than 2% of population is flying. These kind of packaged holidays will bolster not only domestic tourism circuit but also the ancilliary as well as the mainstream revenues. The passengers can get attractive fares as we are bundling with hotels,” Raghavan said.
In fiscal year 2012, Air India had sold 2,454 holiday packages, carried 5,993 passengers and sold 14,121 room nights.
IndiGo is offering business packages starting from Rs.8,398 and leisure packages starting from Rs.8,058.
“Suppliers like airlines want to add value to their offerings and packages are the best way forward since they control air inventory to manage pricing which is 50% cost of two-three day travel holiday. It is absolutely the right way to go,” said Ram Badrinathan, founder and chief executive of travel consultant GlobalTHEN, run by Island Education Pvt. Ltd.
According to Badrinathan, the key challenge is to compete against large travel agencies and online travel agents as they offer a suite of product across multiple suppliers and focus on marketing. “In airlines, there is a team of five-six people who create and market packages. In large travel agencies, there is a team of hundreds of people focusing on the same problem. It is difficult to compete and build a sizeable business, Badrinathan said, adding, “but it’s an important initiative to build a new revenue stream and sell unsold inventory.”