Low-cost carriers make hay as companies cut costs

The next time you fly a low-cost airline, don’t be surprised to find the CEO of a company in the seat next to yours.The days of corporate frequent fliers plonking themselves in plush seats at the pointy end of a plane are over. Companies are cutting corners like never before, forcing their executives to shift to no-frills airlines that do not serve even a complimentary bottle of water.
The downturn-induced migration from business to cattle class has led to low-cost airlines doing good business in the past two months.
IndiGo’s passenger load this month is 10 per cent more than the figure for the corresponding period last year. “We have touched 84 per cent despite higher fares than last year and more flights,” an official of the airline said over phone from Delhi.
IndiGo had 13 daily departures from Calcutta airport last year. The number has increased to 15 this year and the airline is tying up with companies to offer cheaper fares for business travel.
SpiceJet, too, has benefited from the switch. “Business on the metro routes is good because these are the sectors where we have the maximum number of business fliers,” an airline official said.
The Airlines Operators’ Committee, Calcutta, confirmed that regular airlines had taken a hit while low-cost carriers were getting more passengers since the meltdown began.
18/11/08 Sanjay Mandal/The Telegraph

Read More

Fliers return to budget carriers

New Delhi: No-frills airlines like IndiGo, SpiceJet and Kingfisher Red are reclaiming ground lost to their full-service rivals, as belt-tightening across industries forces companies to seek cheaper travel options.
Riding on a growing number of corporate air travellers and lower fares compared to rivals like Jet Airways and Kingfisher Airlines, these airlines have managed to win back the market share they lost in the fiscal second quarter.
The market share of low-cost carriers bounced back to the June 2008 level of 46.4% in October, after slipping to 41% during July-September, according to data from the directorate general of civil aviation.
While full-service carriers have been reluctant to reduce fares even after jet fuel prices fell 42% in three months, budget airlines have scrapped congestion charges and introduced low fares on advance ticket bookings.
Full-service carriers such as Jet Airways and Air India charge a transaction fee of Rs 350 and congestion charge of Rs 150 per ticket.
Jet charges about Rs 7,400 including fuel surcharge and taxes for a one-way ticket from New Delhi to Mumbai. Against this, IndiGo and SpiceJet charge Rs 5,125 for the same journey. The Delhi-Mumbai sector commands close to 60% domestic air traffic of the country.
14/10/08 Nirbhay Kumar/Economic Times

Read More

Global carriers start low-fare play in local skies

Mumbai: Even as Indian carriers go slow on their international plans, international carriers are swooping in to corner market share with low fares.
Malaysian low-cost carrier AirAsia is giving away tickets on its new flight between Tiruchirappalli and Kuala Lumpur at Rs 699 one way.
Last week, British Airways had announced a similar marketing scheme through which tickets on its Hyderabad-London sector were sold for Rs 90. Connection to North America started at Rs 990.
The fares indicated are just the basic fares and exclude the substantial taxes and surcharges. But, they do add to consumer excitement in the category nevertheless.
Clearly, for Air Asia and British Airways, the game is one of stimulating passenger demand through these fares so that the capacity they are adding in these times of crisis is justified.
The fare war may have has just started. In the next few months, the Malaysian private carrier is looking at Chennai, Cochin, Kolkata, Bangalore and Hyderabad for AirAsia, and at New Delhi and Mumbai for AirAsia X.
08/11/08 Nirmal John/Daily News & Analysis

Read More

Sama’s Dammam-Mumbai flights start from Nov. 12

Riyadh: Sama, the budget airline will operate three weekly flights between Dammam-Mumbai, on a fare which begins from as low as SR199. The flights start Nov. 12
Samer Atawi, Sama CCO said the three weekly flights will be on Saturdays, Mondays and Wednesdays. However, the low-fare will be offered on first-come first-served basis, he said. The aircraft will be 148-seater Boeing 737s.
“Sama will be the first airline in Saudi Arabia to launch its operation to India on such low fares,” he said. Atawi said Sama decision to launch its operation to India was purely based on high demand. The airlines currently operating to Mumbai could not meet the high demand, he said. “Moreover, not a single airline has so far offered fares as low as SR199,” Atawi added.
He said there was no question of staging a fare-war on Indian route, as Sama has already launched similar low-fare flights between Dammam-Alexandria, Dammam-Damascus and Jeddah-Damascus, he said.
He said introduction of flights between Riyadh-Mumbai and Jeddah-Mumbai are also on the cards as Sama was in the process of acquiring five more new aircraft early next year.
“However, we do not want to name Sama as ‘budget airline’ rather it is a smart carrier for its known excellent customer care and in-flight service to the passengers,” he said.
06/11/08 Shahid Ali Khan/Saudi Gazette/Bhatkallys, United Arab Emirates

Read More

Budget carriers set to cut fares by 15 per cent

Mumbai: Air travellers finally have some reason to cheer. The country’s three low-cost airlines — SpiceJet, IndiGo and GoAir — are likely to slash fares between 10% an d 15% from November 15.
This follows the oil companies’ decision to cut aviation turbine fuel (ATF) prices, coupled with the government’s move to withdraw the 5% Customs duty on jet fuel. The airlines have taken an in-principle decision to slash fares to pass on the benefit of the fall in ATF prices to customers. An announcement is expected in a couple of days.
Meanwhile in a related development, state-owned oil firms once again cut jet fuel prices by up to Rs 2,100 per kilolitre on Monday night. Another cut in ATF prices is likely to come on November 15. Thus, there has been a 20% reduction in jet fuel prices in three days.
Interestingly, these three airlines control one-fourth of the domestic market. Sources said these airlines plan to announce the decision on the same day to get maximum mileage against full-fledged carriers — the Jet-Kingfisher alliance and Air India — which have no plans to cut fares.
There are reports that the ATF prices would be further slashed within the next few days, in line with the drop in crude oil prices. A top SpiceJet source said: “There could be a fare cut in some sectors, but nothing has been finalised as yet. SpiceJet will take the final call on Wednesday.” He declined to give details.
Post the proposed cut, a Mumbai-Delhi ticket by SpiceJet, IndiGo and GoAir would cost around Rs 3,800, including taxes, during non-peak hours as compared to Rs 4,475 at present. In comparison, Jet, Kingfisher and Air India’s fares in the sector are around Rs 7,237, Rs 5,838 and Rs 6,594, respectively.
04/11/08 Mithun Roy/Economic Times

Read More

The flight of low-cost airlines

Five years after it started, the low-cost aviation model in India is gasping for breath. Value carrier is the in thing.
Last month, Mumbai-based low-cost carrier GoAir, the only airline still offering fares of Rs 0-99, reminiscent of Air Deccan’s pricing in 2004, made a surprise announcement. It added business class to its flights. To a low-cost aviation evangelist, that would be akin to a kurta-clad communist devouring Big Mac.
Christened Go Comfort, the new section offers food and other services — the so-called “frills” — and costs more than economy class. The launch of Go Comfort is seen as GoAir’s flight into the category of value carriers — a hybrid between a low-cost carrier, or an LCC, and a full-service carrier. “GoAir wanted to study the market at every stage before planning growth,” says Edgardo Badiali, chief executive.
Still, this has increased the clamour that the LCC model cannot survive. The most vociferous is Vijay Mallya, who toyed with the idea of starting Kingfisher Airline, of which he is chairman, as an LCC, but quickly junked the idea and made it into a premium airline.
“If GoAir, which is the recent champion of low-cost carriers, is changing its model, it only proves what I have been saying for so long, that the budget carrier model cannot survive in India,” smirks Mallya.
The cumulative market share of LCCs has come down from 47 per cent in January this year to 41 per cent in September. Their average passenger load factor has fallen from 65 per cent to 54 per cent. As the aviation sector grapples with a slowdown, the sales of LCCs in September this year over August fell 37 per cent; the drop was much less at 13 per cent for full-service carriers, say travel companies.
04/11/08 Anirban Chowdhury/Business Standard

Read More

Sama’s Dammam-Mumbai flights start from Nov. 12

Riyadh: Sama, the budget airline will operate three weekly flights between Dammam-Mumbai, on a fare which begins from as low as SR199.
The flights start Nov. 12
Samer Atawi, Sama CCO said the three weekly flights will be on Saturdays, Mondays and Wednesdays. However, the low-fare will be offered on first-come first-served basis, he said. The aircraft will be 148-seater Boeing 737s.
“Sama will be the first airline in Saudi Arabia to launch its operation to India on such low fares,” he said.
“Moreover, not a single airline has so far offered fares as low as SR199,” Atawi added.
He said introduction of flights between Riyadh-Mumbai and Jeddah-Mumbai are also on the cards as Sama was in the process of acquiring five more new aircraft early next year.
There are many Saudi students enrolled in Indian universities besides 1.6 million Indian workers living in Saudi Arabia. They all look for low fares to travel between the two countries for employment, visit or Umrah purposes, he said.
“However, we do not want to name Sama as ‘budget airline’ rather it is a smart carrier for its known excellent customer care and in-flight service to the passengers,” he said.
For online booking passengers can follow a mere five-step procedure by logging on its website (www.flysama.com) or through Call Center on 9200 05588, or Sales Center in all the main cities (Riyadh, Dammam, Jeddah, Madina, Abha) and the airports, or through authorized travel agents inside Saudi Arabia and outside.
02/11/08 Saudi Gazette, Saudi Arabia

Read More