No-frills airlines eye non-ticket revenues

New Delhi: Low-cost airlines such as IndiGo and SpiceJet are reinventing themselves to beat full-service carriers by adding ancillary source of revenues such as more choices in in-flight food and flexible ticket booking. The move is expected to help the carriers keep airfare low thus attracting more passengers.
While higher flight occupancy will add to budget carriers’ top line, the revenue from ancillary sources would compensate for the losses on account of low fare and bring profits.
One of the most successful no-frill airlines, Ryanair, has managed to make profits operating this model last year even as carriers across the world remained in deep red.
As per an estimate, domestic low-cost carriers are currently generating only 5-6% revenue from their ancillary sources as against a global benchmark of 20%. The airlines are, however, targeting larger share from non-ticket sales by offering more paid services.
Country’s largest budget airline IndiGo is planning to add more food options and beverages onboard in the coming months. It has implemented schemes for its corporate travellers whereby they can avail flexibility in booking, cancellation and rescheduling of flights on the lines of full-fare carriers Jet Airways and Kingfisher.
With budget airlines having low operating cost on account of one-type fleet, almost insignificant distribution cost, one-class configuration and point-to-point connectivity they are able to keep tariff low.
08/03/10  Nirbhay Kumar/Economic Times

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Categories: Low Cost General Mar 2010