Saturday, November 12, 2016

Low fares, high costs are a challenge in India, says Lufthansa's India head Wolfgang Will

New Delhi: Lufthansa Airlines is the largest European airline in India with around 2.3 per cent of the market share of India’s international traffic. However, the German carrier faces challenge from Gulf airlines which dominate the Indian market. High costs and low fares in India is an issue too, Wolfgang Will, Lufthansa’s South Asia director tells Aneesh Phadnis. Excerpts:

Domestic and international airlines are seeing a passenger volume growth but yields are under pressure in India. What is Lufthansa’s experience?

2016 was an interesting year. As usual we saw airlines launch discount fares in February to get their base loads. But this year promotions have continued till now. We were reluctant to join the pack but we were forced to do it and yes there was a pressure on yields. Volume growth is never an issue in India because it is a growing market. India is not a low-cost market, it is a low-fare market. It is so competitive that airlines are struggling to get decent average revenue per passenger. But cost of operations is one of the highest in India.

In terms of profit is 2016 turning out to be better than 2015?

I cannot give a specific figure but all in all it is better. We did nice volumes and we had means of controlling our yields.
This is the first full year after the introduction of premium economy cabins on our India flights and this is a positive development. We could have stable yields despite all the promotions because of the premium economy product. It is priced more in the range of economy fares and for extra charge passengers get more amenities and comfort. The introduction of premium economy service has given us a nice boost and we have taken a market lead in the segment in Europe.
12/11/16 Aneesh Phadnis/Business Standard