Recession: Flying cattle class becomes the norm

by admin on August 14, 2012

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Business Class FlightsThere was a high tide during cheap tickets: Even the middle or low income groups people rushed to experience flying for the first time.  Prior to this, only the high income groups were able to fly. But as the adage goes “what goes up must come down”, during the last recession, the government euphemistically called for austerity measures, but this time, cutting costs has become the norm, even corporate giants are cutting costs from every angle, thus CEO’s, the upper class and well heeled families who would normally fly Business class are literally jostling with the lower income groups to save on airfares by flying economy class.  “A business class ticket from Mumbai to Delhi which to used to cost Rs.29, 000 this January is now selling now at  Rs 49,000 January 2013 one way” quotes Ajay Prakash, President, Travel Agents Federation of India.

In January this year, airlines operated 51,712 domestic flights, as against 46,092 flights operated in January 2011. February too had more flights this year compared to last year. But in April, all airlines put together operated 48,105 flights; i.e, 427 flights fewer than what took to the air in April 2011. (source: Page 1, Economic Times, 9 August 2012).

The domino effect: Business class fares seat have hit the ceiling as seat availability have been halved in the last one and half years. Experts say that that even Kingfisher has cut its fleet which offered 20 business tickets on its A320 fleet till last November has cut its fleet by over 80% (down from 64 aircraft in 2011 to 20 12 this year).Kingfisher is the leading victim of turbulence in the Indian aviation industry, as regulatory environment Fuel charges make up for 50% of an airline’s total cost.

New Delhi’s airport has been termed as the worlds costliest by the International Air Traffic Association   which represents more than 80 percent of global air traffic and aviation fuels are about 50% higher than other global airports. While Kingfisher pilots and crew have been protesting against non –payment of dues, leading to cancellation of flights, other airlines are recalibrating their seating arrangements to meet their needs in league with the current economic slowdown.

In January this year, airlines operated 51,712 domestic flights, as against 46,092 flights operated in January 2011. February too, had more flights this year compared to last year. But in April, all airlines put together operated 48,105 flights; viz., 427 flights fewer than what took to the air in April 2011.

Even Vodafone has asked their travel agents to discourage its executives from flying business class, with the exemption of the MD.  Amber Dubey, partner and head (aviation) at global consultancy firm KPMG, says that the increase in domestic airfares was a result of change in the demand-supply equation in the previous quarter. “Demand shot up due to the summer rush and the number of flights on offer went down,” he said. Dubey noted that in the current July-September quarter, traditionally a lean season for airlines, airfares are likely to cool down a bit. (source: Page 1, Economic Times, 9 August 2012).

Make My Trip cofounder Keyur Joshi says that “even top executives in India Inc. do not fly business class on domestic flights any longer.” Cox and Kings ,Head (Relationships) says: “Many who do travel on (Business class) are using upgrade vouchers or coupons that they receive when their company books a lot of tickets.” Although it might be status symbol for head honchos; but only internationally, domestically, it just eats up revenues which could be used to cover other expenses more wisely.Airport Rush

Alarm bells began to ring this year in March, when all airlines put together operated 242 fewer domestic flights, creating a shortfall of 24,000 seats, compared to the same time last year.

As damage control, some airlines are also reconfiguring their business class seats for the budget travelers. So, it might mean demeaning the elite class to travel cattle class.  Could this herald in the death knell for Business class travelers? It all depends on the recession loosening its grip faster, fuel prices taking a dip, the DGCA, Airports  Authority of India and government’s views on these factors on a  macroeconomic level  so as to a stabilize the big  picture, while making  inflationary pressures return to normalcy. Thus, these Low cost airlines have capitalized 70% of the market share, by optimizing services offered, minus the frills attached.

The story is the same on other routes. The cheapest one-way fare on offer on the Mumbai-Delhi route for this week is close to Rs 8,000. Last year, the same ticket would have been in the range of Rs 5000. This represents a massive increase of 60% in airfares. And if you still would like to buy a cheap air ticket then you would need to book at least a month in advance.

So, the only solution for a traveler left is to make flight booking at least 30 days in advance, to an airline of their choice or face the rush and huge price jump for last moment ticketing.

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