Airlines look to new revenue streams as fuel prices soar

Mumbai: In a bid to combat shrinking profits owing to rising fuel prices, airlines in India have started looking at newer revenue generating streams, as well as beefing up their business through new promotional activities. Air India is studying the cargo market in various countries to generate over 10% of its revenues from this new line of business. GoAir, too, is planning to enhance its cargo capacity.
Meanwhile, private carrier Jet has introduced special holiday packages for its passengers, while Kingfisher is in the process of designing a similar strategy. Cargo operations of Air India, at present, contribute 6% to the airline's revenues. The company is now studying the South East Asian market to ascertain the potential of cargo operations to that region, which normally has a high cargo offtake from India, especially in perishable goods. Says an aviation analyst with a Mumbai based broking firm, "Airlines looking at alternative revenue streams assumes significance since it comes at a time when jet fuel prices are getting steeper each day."
Comparing the airline industry to the sugar sector, he added that a couple of years ago, the sugar industry was also reeling under margin pressure, and the players had to find out an alternative way of generating income. They started producing power from bagasse, after extracting the juice from the sugarcane to improve revenues.
21/05/08 Shaheen Mansuri/Financial Express

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Categories: Indian Aviation- In General May 2008