Wednesday, December 05, 2018

Is the low-cost airline you are flying really low-cost?

Whether airlines in India are really low-cost?
A back-of-the-envelope calculation by online travel platform Ixigo on November 28 found the answer to be no. For example, a full service carrier (FSC) flying from Delhi to Mumbai on December 10, a flier will have to pay approximately Rs 7,133 for a flexi-fare option, which offers a complimentary hot meal, beverage, priority check-in and a baggage allowance of 20 kg. If you compare with an LCC, for the same route and day, a traveller will have to shell out Rs 6,596 for a basic saver fare with a baggage allowance of 15 kg. For meals and extra baggage allowance can add Rs 2,000-2,500 to the basic saver fare.

Aloke Bajpai, CEO and co-founder, ixigo, said, "Full-service carriers are experimenting with fares by offering flexible features at different price points to attract LCC customers."

With the entire sector in red, almost all the airlines in the country are looking to raise revenues from ancillary sources, which are currently less than 10% of their total revenues, as against much higher share of revenues (10-20%) in developed markets. However, these measures are not adequate to compensate the large hike in ATF prices and the rise in costs due to rupee depreciation, rating agency Icra said.

Do pure LCC exists in India?

According to analysts, true LCCs do not exist in India and the situation is likely to remain unchanged for several decades to come.

The reason is that LCCs are primarily required to fly between satellite (secondary) airports of the city and fly during the non-peak hours. However, both the conditions are not met in India as none of the cities have secondary airports. Further, all LCCs just like their FSC counterparts fly during the peak hours.

So adding the other external dynamics such as fuel, maintenance, handling charges, there is hardly any difference remains between LCCs and FSCs due to lack of a structural environment in India.

Mark D Martin, founder & CEO of Martin Consulting, a Dubai-based aviation consultant, said in India the LCC are nothing more than the airlines which provide fares on the preferences of the customers. So ultimately, it depends upon the customer to decide about his/her preferences and fly the airline accordingly. For example, the preference of someone travelling for a vacation will be different in comparison who is going for just a quick meeting and will fly back the same evening. "So a passenger can choose to have services as per her or his requirements and pay accordingly" said Martin, a former head of strategy at SpiceJet.

Are airlines using algorithms for splitting the families and seek additional charges for travelling on adjacent seats?

While Indian aviation fraternity and flier debate over the subject, a similar deliberation is also going around in the UK. The airlines in the UK have reportedly been called out for using algorithms that split up the families with the same surnames and seek additional charges for travelling in adjacent seats.
05/12/18 Shahkar Abidi/DNA
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