Low-cost carriers now try out new revenue options

New Delhi: Aggressive pricing, falling yields and rising aviation turbine fuel prices are compelling low-cost carriers (LCCs) to look at alternative sources of revenue. While Air Deccan’s and GoAir’s 6% revenue, at present, comes from non-ticket sources, SpiceJet’s 17% comes from ancillary areas.
According to industry estimates, all the airlines put together will register a cash loss of Rs 2,000-2,500 crore in 2007-08. Furthermore, according to an Ernst & Young report, the success of Indian LCCs depends on their ability to follow the LCC model, alternative sources of revenue such as hotel bookings, advertising revenue being some of its major features.
Air Deccan, which recently tied up with Travelguru to sell hotel rooms, is in talks to sell travel insurance.
GoAir is planning to sell hotels, cars and insurance to earn extra bucks.
SpiceJet currently sells hotel rooms in collaboration with a travel portal. But it does not have on-board ads.
11/04/07 Vishakha Talreja/Economic Times

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Categories: Low Cost General Apr 2007