In true spirit of Maharaja, Air India has decided to stick to its full service business model despite the whole of domestic civil aviation market is moving the low-fare way.
Its low-cost subsidiary Air India Express, would however, be strengthened in due course to offer low-fare services.
“We have made a conscious decision to remain full service. Passengers have certain aspirations from a brand and when they don’t get the desired
service, it affects the brand in the long run,” said Arvind Jadhav, CMD, Air India.
He was referring to the low-fare services of Jet Airways Konnect and Kingfisher Red, which are piggy backing on their full service mother brands.
“There is no point in competing with the low-cost (fare) market, which has now combined market share of 65 per cent. Our aim is to make money and the demand for our service is growing,” he said.
Over the past seven months Jet Airways and Kingfisher Airlines have converted a large portion of their seat capacity into low-fare offerings to retain their marketshare as well as to curb the growing importance of low-cost carriers such as IndiGo, SpiceJet and Go Air.
Aviation consultancy CAPA believes that the domestic market would become entirely low-cost as Jet and Kingfisher move to a largely all-economy model. In the past months, Jet has converted over a dozen of its planes into one-class configurations
by pulling out business class seats so as to create capacity for Jet Airways Konnect.
Air India believes that there is certain market that looks for premium class offering. “Our executive class is in demand. Customers, for example, from Bengaluru do not want only eight seats in the executive class, they want 20 seats,” Jadhav said.
In November, Air India has enhanced it domestic market share by two points and achieved seat load factor of 74.1 per cent, which was higher than all legacy carriers on a stand-alone basis.
In the April to November period, it carried 10.1 per cent more passengers than the corresponding period. The airline is
upbeat about continuing the improved performance in the coming months as well.
“Our aircraft utilisation has considerably improved and this has been a major factor for the uptrend in our performance,” Jadhav said, adding “While the traffic has picked up in the last few months, which gives a ray of hope to the airline industry, the finances are still weak due to low yields.”