Airlines India, Indian Airlines

Air Deccan has announced that it will sell one lac tickets for Rs. 9 for travels on all sectors of the airline till 25th March 2006. Air Deccan has made this offer on celebrations of Suvarna Utsava of Karnataka. The state has completed 50 years of its formation. The airline has also announced the launch of its new route from Bangalore to Hampi scheduled to commence from 15th November 2006. The bookings can be made at the website of airdeccan. However this fare is exclusive of all taxes.

The discounted tickets are expected to exhaust soon considering the heavy discounts offered by the airline, so in case you are scheduling a trip before 25th March 2006, book your flights now, Rs. 9 tickets will not be available for long.

Air Deccan is known for its low priced tickets, but the prices have recently been challenged by new entrants like Spicejet and Goair. These kind of discounts would attract the passengers back to Air Deccan.

The Board of Indian Airlines has approved the lease of eleven new aircrafts. This would include five Airbus A-320 aircrafts and six 70 seater regional jets. The aircrafts shall be delivered over the next six months. The Indian Airlines is planning to promote its subsidiary Alliance Air as low cost air carrier to compete with the new low cost private players. The regional jets will be operated by the Alliance Air on a cost competitive model. The airline is also planning to outsource the maintenance work for the new regional jets to reduce its fixed wages. Such steps would be necessary to bring about a cost competitive model.

Earlier in February 2006, the airline had placed an order to Airbus Industries to buy 43 aircrafts including 19 A-319s, 4 A-320s and 20 A-321s. Out of which one aircraft has been delivered recently. Presently the airline has a fleet of 74 aircrafts.

Indian Airlines is getting aggressive in expansion. It is adding more aircrafts to its fleet to stay in competition with the private players.

After the proposed merger of the Indian Airlines with Air India, the cargo arm of Indian Airlines will be hived off to operate as separate entity. The proposed cargo operations will be handled as a division of Indian Airlines till the process of merger is completed. The airline has already taken approval from the Government of India for its cargo operations. India has a huge market for cargo carriers and is growing at a rate of 20 percent per year. Jet Airways and Kingfisher Airlines are also planning to start their cargo operations. with the booming retail sector, the cargo business is expected to grow at a higher pace as the retail companies would use air cargo services to ship their goods to various destinations across the country.

Under the process the airline is planning to convert some of its existing passenger carriers into freighters. To start with, the airline will convert its five Boeing 737 aircrafts into cargo carriers. Some non airline companies are also showing their interests in air cargo business, therefore, the airline companies are making their first moves to encash the upcoming opportunity.

Air Sahara today announced a new scheme, offering passengers unlimited flying to any destination on their network on payment of a fixed sum.

Under the ‘Fly Unlimited’ scheme unveiled by the airline today, passengers can fly to any destination for a year on paying Rs 699 for 365 days, that is by depositing a sum of over Rs 2.55 lakh.

The airline is also offering such a package for 90 days at the rate of Rs 799 each day, for 60 days at Rs 899 and for 30 days at Rs 999, airline President Alok Sharma told reporters here.

“These are innovative schemes and may take time for new passengers to get used to. But we are confident that frequent flyers will benefit from them,” he said.

After clocking losses of Rs 340 crore for the 15 months ended June, 2006, budget carrier Air Deccan is changing course — from focussing on market share to revenues. As a corollary, route rationalisation and yield management become the buzzwords.

“We are planning to protect our revenues through innovative marketing campaigns, route rationalisation and a sound revenue management system. We have recently hired two executives from Ireland’s state-owned carrier Aer Lingus to manage our revenues. With this, things are expected to look up on the revenue side,” said Air Deccan CEO Warwick Brady on the sideline of Centre for Asia Pacific Aviation (CAPA) symposium here on Saturday.

It has already kicked off the process by cutting frequency and flights on some sectors to make them commercially viable. The no-frills airline, which has usurped a substantial chunk of the aviation market pie (21.2% in June, 2006) over the last one year, wants to improve its yields by 5-6% over the next couple of months.

“December onwards our yields would be up by 5-6%, which would give us better margins. Playing the revenue game is hard because the range of margin (between $1-3 -Rs 46-138 per passenger) in the airline business is very small,” said Brady.

Air Deccan’s current average yield is around Rs 2,700 per passenger. Today the airline was missing the break-even yield by $7-8 (Rs 322-368) in a bad month and by $4-5 (Rs 184-230) in a good month. On a fare of Rs 3,000, we need to achieve a load factor of 80% to break even,” Brady said.

At present, the airline’s average load factor is 78%. However, on Airbus routes, it manages to register a higher load of over 85%. The airline, which will be operating 60,000 flights from now to March, 2007 (on existing and new aircraft), is looking at a market share of 25% by the middle of 2007.

And as the airline pursues higher revenues, it does not mind if it slips a little on market share. “We don’t want to jeopardise our revenue flow for 1-2% market share,” quips Brady.

Analysts said the budget carrier’s move was a step in the right direction. “This mindset is a good change. There is no point in filling up your aircraft 100% if you are not making profits. Indian airlines need to concentrate on keeping their costs low and ensure steady stream of healthy revenue to offer competitive fares. A focused approach to bottomline is very critical in ensuring survival of airlines,” said Kalpesh Parekh, assistant vice-president at ASK Raymond James.