Airlines sold bulk seats before increasing fares

New Delhi: In a move to ensure that their passenger load factors do not fall dramatically as a result of the recent hike in fares, full-service carriers like Kingfisher, Jet Airways and Air India have sold travel coupons worth around Rs 300 crore to travel agents. The coupons, valid till June-end, were sold a few days before the airlines almost doubled their fares in one go.
Experts say the full-service carriers have ensured 5-6 per cent of their average sales through these coupons. This, they add, will partly make up for the slowdown in demand that is expected due to the fare hike.
This will also give the big airlines an edge over low-cost carriers (LCCs), none of whom, except IndiGo, have sold coupons in such large chunks. The fares offered by full-service carriers through the coupons are 20 per cent less than the new fares announced by the LCCs on key routes. Experts say the move will hit the passenger load factor of LCCs, which will in any case fall due to the increase in air fares.
Unlike normal practice, travel agents were selling the coupons even in ones and twos to attract leisure travellers. “This is the first time we have sold coupons in such large numbers,” said Siva Ramachandran, head (global sales), Kingfisher. Travel industry executives said Kingfisher sold coupons worth around Rs 80 crore.
Full-service carriers carry close to 2 million passengers per month. Taking the average ticket price to be Rs 4,000, the average monthly passenger revenue of a full-service carrier is Rs 800 crore.
Travel agents agree that airlines have never sold coupons in such a huge bulk.
18/02/09 Anirban Chowdhury/Business Standard

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Categories: Indian Aviation- In General Feb 2009