The Hindu Business Line : AI Express to devise a low-cost biz model

THE low-cost carrier, Air-India Express, plans to adopt a new business model that will reduce operating costs significantly and leave enough margins for a profitable service, despite pegging its fares 25 per cent lower than AI.

According to airline sources, the new model focuses on three key areas: use of fuel-efficient aircraft, optimum utilisation of manpower and scaling down of on-board services.

The airline will be operating Boeing 737-800 aircraft, which have a fuel consumption of under 4,000 kilos per hour and the capacity to seat 180 passengers. In comparison, the A310, which has a similar capacity and range, consumes about 7,000 kilos per hour, said an airline official.

The terms of employment at Air-India Express will be different from those of Air-India. Pilots of the rank of commanders alone will be full-time employees of the airline. Co-pilots and cabin crew will be taken on contract and will not be governed by the union agreements as in the case of AI. The airline will be able to trim expenses on provident fund payments and medical expenses by taking staff on contract.

Pilots at AI Express will have to fly between 80 and 90 hours per week compared to roughly 70 hours put in by their AI counterparts. Also, each flight will have just five cabin crew on board as against six-seven on AI.

The flights will have a quick turnaround time, ensuring that the aircraft are on the ground for the shortest possible time. Further, the flights will be short hops, for example, Kozhikode-Dubai-Kozhikode or Kochi-Dubai-Kochi, and will return the same day, obviating the costs of a stop-over at a foreign station.

Passengers will be offered packed meals as against the hot meals available on a full-service carrier. While water will be served free on the flight, soft drinks and other refreshments will be charged.

The emphasis would be on achieving higher productivity through multi-skilling and multi-tasking. For example, AI Express will have just one technical department unlike AI, which has separate engineering, operations and ground-handling departments.

Further, the airline will employ in-house software for its distribution model, thereby saving on the expenses incurred on global distribution systems. Internet bookings will be encouraged with the airline Web site painted on the exterior of the aircraft for maximum visibility, the sources said.

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