LCC airspace shrinking fast

New Delhi: The craze for low-cost air travel has hit the pause button, with full-service airlines clawing back by narrowing the gap in tariffs.
While both categories of airlines have hiked fares repeatedly to offset stiff crude oil prices, full-service carriers (FSCs) have been a little less demanding than their budget counterparts. As a result, market share of full-service airlines has increased to 59% in August 2008 as compared to 51% in May.
Low-cost carriers (LCCs), on the other hand, had 41% market share in August as compared to a peak of 49% before their pie started shrinking a couple of months back. Passengers seem to feel that there is no point in sacrificing the comforts of travelling by a network carrier for the sake of a marginal difference in tariff.
“There is no low-cost model as such in the country as cost of operation for the two kinds of airlines is more or less same. If you see the cost of ground-handling, check-in, maintenance and baggage handling among others, the cost differential for the two models is not much.
The airport charges are also same for the two types of carriers. In this scenario we don’t think a budget airline can afford to sell tickets at very low price. Unlike India, there are low-cost airports in developed countries and these airport operators’ tariff is lower for low-cost airlines,” Kingfisher Airlines executive vice-president Rajesh Verma said.
Apart from offering meals or refreshments on board, full-service carriers provide various other facilities that LCCs don’t. Refund and cancellation rules of full-service carriers are also far liberal than that of LCCs.
19/09/08 Nirbhay Kumar/Economic Times

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Categories: Low Cost General Sep 2008