AI set to start low-cost service from September

Realising that only a budget-airline model can ensure better passenger load factor these days, cash-strapped Air India has decided to begin low-cost domestic operations from September — to tap the peak October-December travel season. The airline will launch these flights under the existing brand of Air India Express that at present flies to global destinations.
"The premium class market has all but vanished. Domestic full service carriers have massive overcapacities and yields have dropped by 40%," said highly placed sources. While full fare carriers barely manage about 70% loads despite cutting capacity, LCCs (low-cost carriers) report over 80% occupancies.
Since LCC success largely depends on online sales, AI is aiming to revamp its online booking engine by August-end so that a user-friendly system is in place before the launch. It's also going to tweak its frequent flyer programme.
AI was the only full service airline that did not have a domestic LCC in its fold. On the other hand, both Jet and Kingfisher have shifted their planes from full service to their LCC arms on domestic and international routes.
Launching the LCC is part of AI CMD Arvind Jadhav's revamp plan for the airline. Jadhav, who puts in almost 16 hours a day — charting the survival and revival strategy for AI — has set two targets — increase revenue and lower costs.
AI is getting an audit of its inventories done. According to sources, it is aiming to raise up to Rs 1,000 crore from sale of some inventories.
14/07/09 Saurabh Sinha/Times of India

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Categories: Low Cost General Jul 2009, NACIL Jul 2009