AI, Kingfisher & Jet may go no-frills on most domestic routes

New Delhi: Amidst growing concern over the financial health of airlines, the top three carriers of the country—Air India, Kingfisher Airlines and Jet Airways—are planning to convert most of their domestic flights into no-frills services. This would result in more attractive fares for consumers, but may further pull down the yield of airlines.
Since the three airlines together control over 60% of the domestic market, the proposed move would significantly curtail full-service operations in the country while the market share of no-frills services would expand in a big way.
The move, which would cheer consumers, comes at a time when airlines are finding it difficult to improve the yield. According to an industry estimate, average passenger tariff has halved to Rs 3,000 in the last five years. The cost of operation of airlines has, however, gone up during this period resulting in a shortfall in revenue.
While Jet Airways has said it will increase the number of flights on its JetKonnect network to 160 by October out of its total 290 flights on domestic routes, Kingfisher has already shifted 70% its 365 domestic flights a day to the no-frills brand.
The country’s largest carrier by fleet size, Air India, has said it will gradually shift 75% of its domestic flights to its low-cost entity Air India Express. The increased supply of seats in the market may force airlines to sell tickets below cost.
Domestic carriers are together estimated to have lost Rs 10,000 crore in 2008-09 mainly on account of high fuel price in the first half of the fiscal and excess capacity.
10/08/09 Nirbhay Kumar/Economic Times

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