It’s not about tweaking airfares!

During the CAPA India Aviation Summit 2012 in Mumbai, the Indian Aviation experts evaluated the market opportunities in India, expanding the customer base and about breaking the cartel.

The two- day aviation conference, CAPA India Aviation Summit 2012 by CAPA ( Centre for Asia- Pacific Aviation), witnessed the decision makers of the Indian aviation sector, industry experts and international investors speaking about the various challenges, issues, opportunities and the way forward for the Indian aviation sector. The powerpacked business sessions touched upon themes like ‘India Market Strategies for foreign airlines and airports’, ‘ The LCC story in India’, ‘ What Next for Full Service Airlines in India? Issues, Challenges, Opportunities and an Action Plan’, ‘ LCC stories from the frontline: Success, mistakes, learnings and next steps, etc. However, the most talked about topic was about an airline model, appropriate for the Indian aviation market. According to Bill

Franke, Managing Partner, IndiGo Partners, the Indian airline operators need to first understand the model they want to operate on instead of operating on a hybrid model. “In India, airline operators are baffled with the operating model. Operate an airline that fits your model and execute it. The cost and fleet will later support your model. I suppose the LCC model is the

dependent on long-haul routes i. e. international routes. This is because in international aviation space, every airline has price discipline which lowers the competition and improves service standards, resulting in better loads and profitability.” ment and fill the plane as it’s a crime to fly empty aircraft in Indian skies.” Adding further, Adel Ali, CEO, Air Arabia said, “If you are in a LCC model business, 70 per cent is not good enough. To be profitable, you need to be above 80-85 per cent in loads on every aircraft and route. Airlines in India fly by reducing pricing and pinching their profits instead of fighting with the system to reduce their operational cost.” He suggested that Indian carriers should focus on ancillary revenues and add-ons to earn that ‘extra’ revenue. For instance, F&B is the biggest contributor for ancillary revenue for AirAsia while insurance and extra baggage are the emerging revenue source for the airline.

The only reason Jet Airways launched its low cost model – JetKonnect, was for the ‘survival’ of the airline, informed Sudheer Raghavan, CCO, Jet Airways. He said, “Aviation industry’s regulatory

Aviation industry’s regulatory framework, tax regime and cost structure needs to change in-perspective to become economy enabler Airline operators should do a proper revenue management and fill the plane as it’s a crime to fly empty aircraft The cost structure of the aviation sector is not making it economically viable for airlines to offer lower fares in the Indian market

framework, tax regime and cost structure needs to change in-perspective to become economy enabler. India is one of the most expensive aviation markets to operate in. To manage our load factors, we ‘swing’ our capacity by shifting the loads to JetKonnect in off season (during low demand) and to Jet Airways in peak season as there is more demand. We have brought down our operating cost by 25 per cent in last three years and are taking significant measures to do better.”

According to Raghavan, airlines need to learn to trust each other and unite to fight for a common