Airlines Find Ways To Increase Revenue

Thursday, 16th May 2013 at 09:22am

Most Indian airlines are struggling to make both ends meet as a result of lower demand, increasing operating costs and the skyrocketing fuel prices sending the country's aviation industry into trouble.

But everything is not lost, so to speak. Local airline operators are beginning to find solutions to the problems which have been hounding them for quite a long time already.

Whether it is a boon or bane to the industry, it is still to be seen in the months to come as they start to revise their fares as well as the free baggage allowance policy for each flight.

Earlier, they sought approval from the Union Civil Aviation Ministry to charge passengers for certain service or product that they want to avail during their flight. This system is common to budget airlines where clients purchase only the seat, exclusive of any premium services such as check-in baggage, meals and seat preference.

These services or products were used to be bundled, thus free, in the old fare system for full-service carriers. In the new fare system, clients have the options, whether or not, to avail them with a corresponding fee for each.

The budget carrier, IndiGo, for example, will now charge their domestic passengers Rs500 if they want to occupy the seats considered as premium rows and Rs800 if international flight. Premium seats include those in rows 1, 2, 12 and 13.

Three of the Indian airlines will soon issue their respective official announcements regarding the new revised free baggage allowance or FBA. Air India, Jet Airways and IndiGo said that their respective FBA policies would soon take effect in a matter of days.

According to their petition to the Union Civil Aviation Ministry, passengers will still be entitled to a free check-in baggage, however, but it will be downsized to 15 kilos from the previous 20 kilos. For every weight unit in excess of what is allowed shall be charged against the passenger at approximately Rs250.

Jet Airways premium passengers, however, especially those who are JetPrivilege members are still entitled to enjoy their old FBA. Likewise, premium guests will still enjoy their free baggage allowance of 30 kg on each flight.

Most Indian airlines are suffering heavily from the crisis haunting the local aviation industry due to heavy losses arising from high operating costs, high airport fees as well as increasing jet fuel prices. As a result, most aircraft orders have been put on hold, temporarily aborting their expansion programs in the process.

An aviation analyst said that the new fare system would help airline operators to shave off losses and might even bring them back to profitability.

IndiGo and SpiceJet, both low-cost carriers, have been following the business model most budget carriers around the world have adopted. Essentially, these two airlines are ahead of the game, among local players.

By: Pete Lee.