Tuesday, February 11, 2020

Indian aviation is an LCC market. The conventional FSC model will not work

Indian aviation has in recent years been dominated by low-cost carriers (LCCs). In 2019, LCCs carried 87 percent of the total number of passengers.

The number stood at 68 percent at the beginning of the year. Vistara – the only private full-service carrier (FSC) — after the fall of Jet Airways, decided to induct some of its future aircraft in all economy configuration. The airline is already operating one such aircraft.

Over the years, LCCs have been snatching more and more passengers from the FSCs. India might soon end up with one private FSC, Vistara. Air India, the government-owned other FSC is up for privatisation in the next couple of weeks.

In the early days of operations, Vistara revealed that its research pointed that food was one of the decisive factors for air travellers in India. But to an independent observer, the three-class layout of its aircraft, meal preferences, juices and Starbucks coffee in premium coffee seemed expensive for the Indian market. Slowly but surely, the airline scaled down its food offering, an area which every FSC in the past has looked to cut costs to rein in ballooning losses.

Vistara is not the first airline to do so. Over the last decade or so, FSCs in India tried every trick in the book — and sometimes outside the book — to take on the steady growth of LCCs. Yet, two large FSCs – Kingfisher Airlines and Jet Airways — had to shut down. Air India survives only because of government benevolence.
Kingfisher Airlines and Jet Airways both operated a low-cost subsidiary. These airlines tried operating certain sectors with a low-cost offering, operating non-peak hour flights as LCC offering and peak hour flights as FSC offering, reverting to a full-service model and then offering a fare class without meals and more. It is heartening to see that Vistara isn’t trying any of this, but merely going to operate certain sectors with only economy class on offer.
10/02/20 Ameya Joshi/CNBC TV18

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