The Hindu Business Line : Air travellers willing to pay more: Survey

Whatever it takes
Low fares not creating many new users
Some impact in diverting rail travellers
40 pc of LCC travellers bought tickets online

Mumbai, June 25 Low-cost airlines may be suffering from a debilitating bout of financial haemorrhage as they struggle to keep their fares low to attract passengers.

But what could be good news for them is that a bulk of the passengers is willing to pay even double the existing fares for travelling by air.

At least this is what a survey conducted by the Centre for Asia-Pacific Aviation (CAPA) has revealed.

Presented at the recent fourth annual India and Middle East Low-Cost Airline symposium, the CAPA report has said that 67 per cent of the passengers travelling in full-service carriers (FSCs) would have travelled by air even if the fare had been double of what they paid.

Also, 50 per cent of the low-cost carrier (LCC) passengers who were surveyed shared the same sentiment.

"Therefore, the good news for the airline industry is that potential to increase prices exists," the survey said.

Are low fares actually stimulating new travel markets? A mere nine per cent of the LCC travellers surveyed and five per cent of FSC travellers were flying for the first time.

"This proportion is remarkably similar to the percentage of first-time fliers on Australia's LCC, Jetstar," the report said.

"This correlates with the finding that over half of the LCC travellers would have made the journey even if the fare had been double. However, the low fares would appear to be having some impact in diverting rail travellers."

CAPA conducted the survey on over 2,000 passengers at key airports in India, including Mumbai and Delhi.

Significantly, when the LCC model was uncorked in India some three years ago, many thought it would not work. But they have been proved wrong, as the market is already moving towards consolidation.

However, FSCs still carry the bulk of business travellers in India.

Nearly half of the FSC flyers surveyed were travelling on business (47 per cent), against below 30 per cent in the case of their LCC counterparts.

Again, according to the survey, four out of ten (42 per cent) did not pay for their own tickets, more than twice as many as on LCCs.

Interestingly, about 43 per cent of LCC travellers, twice the proportion of FSC buyers, bought their tickets over the Internet and 48 per cent used credit cards to pay for them.

This is significant as it was earlier thought that the low level of access to credit cards and Internet in India would be a major impediment to the success of the LCC model.

Interestingly, the survey notes that there is no great contrast between the average family incomes of the different categories surveyed.

About 38 per cent of the FSC passengers received less than Rs 40,000 per month, against 46 per cent for LCC users.

The report concludes that the market will continue to enjoy high growth rates and the attractiveness will continue to enlarge the queue of investors. "The sector has the potential to be a win-win for all stakeholders."

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