Low-cost carriers look at loyal fliers to increase market share

New Delhi: The struggling low-cost carriers (LCCs) are borrowing a leaf out of their full-service brethren’s business book — the popular frequent-flier programmes (FFPs). Currently, LCCs in India such as GoAir, SpiceJet and Deccan don’t have a structured, full-fledged FFP in place and they try to lure passengers through limited-period special offers on tickets and freebies. But increasing competition within LCCs and from a resurgent Railways too — with railway minister Lalu Prasad Yadav announcing a 4-7% cut in AC first and second class fares in his budget speech on Tuesday — is making many LCCs to look at loyalty programmes as a way to shore up revenues and build brand stickiness in a market hitherto driven on price alone.
For the first nine months of 2007 about 32 million people took to air in India (a growth of 36% over 2006) with the LCCs (currently five) accounting for over 45% share. Even though projected passenger demand for the next four years remain healthy, the industry is already battling overcapacity. As against domestic seat capacity of 54.8 million (April 2007 to January 2008), airlines carried just 36.7 million passengers during the period, a load factor of around 67%. LCCs believe that the launch of FFPs will help improve load factors, besides snatching market share vis-à-vis full-service carriers.
29/02/08 Dheeraj Tiwari & Vishakha Talreja/Economic Times

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Categories: Low Cost General Feb 2008