The Hindu Business Line : Is it time for more low-cost airlines?

WHILE the lowering of airfares and introduction of the apex fare system have encouraged more people to travel by air, a question as to whether the Indian market is mature enough for the low-cost, no-frills airlines to enter the services on long distance routes has cropped up.

There is also a view that the airlines should be more flexible in fixing the number of seats that would be sold under the apex fare or advance purchase system so that more people could be accommodated in the flights on busy sectors rather than havingthe seats vacant because of the cap on their number.

What is also interesting is the fact that with the Super Apex fare (of tickets booked 30 days in advance) being only marginally higher than the II AC train fare, there is a distinct shift from this segment, mainly on long distance routes, to air travel since it is not only price-competitive but also saves travel fatigue.

Mr Vikram Mohan, Managing Director, Pricol Travels Ltd, Coimbatore, a part of the Premier Instruments and Controls Ltd (Pricol) group, told Business Line that the company's air ticket booking business had witnessed a near 50 per cent surge since the launch of the apex fare system and the abolition of the Inland Air Travel Tax (IATT). But, while the number of bookings has gone up , the business volume has taken a hit because of the cut in airfare.

For instance, while a II AC train ticket to Mumbai from here costs around Rs 1,900, an air ticket booked 30 days in advance costs just about Rs 2,600. While a train journey takes nearly 30 hours, once can reach Mumbai by air in less than two hours.

On the limited number of seats available under the advance ticket booking system, that is normally sold out much before even the specified date of booking on crowded routes like Mumbai-Coimbatore, Mr Mohan said globally, the number of tickets available on advance purchase was limited since the airlines offered a substantial price discount compared to the normal fare and was wary of its bottomline being hit if more tickets were sold at a subsidised rate.

He felt that it is time that in India too, the phenomenon of low-cost airlines is introduced as in the US or in Europe to encourage more people to take to air travel.

He pointed out that some of the most profitable airlines in the world were companies in the low-cost air travel business such as Easy Jet, Ryan Air, South West and even the big guns in the industry had subsidiaries that were in the low-cost air travel business.

Asked whether such a venture could thrive on long distance routes in India, Mr Mohan said it is the cost of flying and not distance, which is the prime consideration for patronising such low-cost airlines in the West.

When the airfare is just about 20-25 per cent of the normal cost, people do not mind putting up with inconveniences like cramped seating, absence of free food etc., while taking the low-cost travel route even for long distances.

An airlines veteran, who did not want to be identified, conceded that fixing of a smaller quota of seats for booking under the apex fare system did not benefit the passengers but at times his company tried to accommodate genuine demand.

He said that he would take up the issue of increasing the apex fare ticket quota at least during off-season so that the occupancy rate of the aircraft goes up and passengers wanting to make use of this facility were not disappointed.

He did not see any significant jump in first time fliers flocking to the airlines, though the number of passengers had definitely gone up. With competition among the airlines hotting up, the customers are in a stronger position and even business travellers try to grab the apex fare advantage.

However, Mr Mohan felt that the concept of air travel is yet to catch up in India to the extent that it is in the Western countries for low-cost airlines to flourish, particularly on shorter routes where the distance could be covered by over night train journey.