Business class takes a hit as fares get costly

New Delhi: Business class is not generating enough business for most airlines. Full-service carriers like Air India, Jet Airways and Kingfisher are feeling the pinch as rising fares and lower occupancy make their profitable business class bleed red.
The average actual occupancy for domestic carriers have gone down drastically to around 40-50% from the 70-75% peak of last year. Business class, which comprises less than 25% of the total number of economy class seats but generates an equivalent amount of revenue for a carrier, has taken a hit.
Drop in occupancy levels affect an airline’s yield mix. With almost the same operating costs—except for catering expenses—business class offers much fatter margins.
According to sources in the airline industry, business travellers are now opting for economy class tickets which now cost as much as business class did last year. Meanwhile, business class fares have more than doubled in the same period.
30/06/08 Chanchal Pal Chauhan/Economic Times

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Categories: Indian Aviation- In General Jun 2008