When I returned to India some two months back , I got the real experience of the boom . I had the first hand account two years ago when I left India and then did not have a chance to experience the same as I was abroad.
The very first to strike is the fact that the tier II and III cities are better connected by the budget airlines. The second is the fact that the profile of the air traveller has changed a lot in last one decade. I remember I used to travel frequently then and air travle was considered as quite a luxury .The profile of air traveler was wealthy businessmen, high ranking PSU Officials or Private sector executives or rich people. For average people air travel was out of reach and people would be very afraid about their etiquettes at airport and during travel.
Come 2008 and I can see common man traveling with his family by air not only within India but abroad as well , something unthinkable a decade ago. Air travel is much cheaper now as compared a decade ago.
This is due to the business model of low cost/ no frill airlines which rely on :
· Higher load factor a harvesting kind of strategy ( low airfares if you book early , goes higher as the travel date nears)
· No frills
· Chance factor ( read overbooking )
· Innovative marketing strategies ( advertising on planes and sell as much as possible )
· High charges for all add on services
· Increased capacity of planes by removing business class and reducing legroom
· Cut corners? ( lets not think of this factor)
Will this happy phase continue ?
Well all the so called no frill airlines in India are in deep red .One reason is the rapid growth of these companies other being high fuel costs, very high taxes ( they are almost always higher than the airline tickets) , high salaries for the employees owing to the skills shortage ( though this is an issue with almost every industry in India) . Such Low costs are clearly not sustainable. Consolidation in the industry is the beginning of the price hike. But I think we can still expect 25-30% growth in the foreseeable future.
Some Positives for the Industry are :
Rising income levels
Better connectivity
Improvement in Infrastructure
Greater acceptability of air trave
Customer service:
Don’t expect much from no frills . I feel there is a great divide in terms of customer service across firms. As per my experience:
Air Deccan – very average , even cutting corners.
Indigo/ SpiceJet – Good
The infrastructure required for such a boom is simply inadequate , though I know that government is working on the same quite seriously .
