11 Feb Low Cost Airlines
The term low cost airline is very familiar to us as they refer to the airlines with low ticket prices. They are also known as no frills, discount or budget carrier. We can find that low-cost airlines are growing in the last fiscal year. The Pizza Hut at the International airports is now a clear indicator of the health of the aviation sector. The consumer reports say that Delhi accounts for 21 percent of the of the country’s total air traffic and the 30 percent rise in the number of pizzas sold in last year reflects the customers mentality in spending more these days. This definitely reflects the revival of airlines. This happens because of the rising number of business travelers, recovering economy and holiday season.
More than 43.8 million passengers travelled in 2009 which is 2.5 million more than the previous year. It is interesting to note that the Pizza Hut installed a high-speed oven which takes half the previous time. The Jet airways traffic in business class went up to 1000 passengers a day. The Spice Jet CEO also has the same statement that they too have got high demand but there are viewing it with great caution as the yields were low in the previous years. It should be noted that the aviation sector is not affected by the rise in the fuel prices. Moreover the economy is showing signs of revival and the business gets a boost on the increased consumption.
Spice Jet posted that they have a profit of Rs 108.9 crore in the December quarter. A year before they had a loss of Rs 17.9 crore. Their revenues also rose to 37 percent. For Jet Airways the profit is Rs 105.8 crore. Even Air India was able to cut its operating losses by 25 percent. This is only because there is an improvement in the management of costs, both in tariffs and crude prices. We can find that consumer complaints have reduced to an extent with better delivery of services. Due to the entire losses the airline companies decided to do some restructuring like cutting back on staff, stopping unprofitable routes and even some airlines were leased out.
The report by Centre of Asia-Pacific Aviation (CAPA) says that the most significant and strategic development in the domestic market is the change over to low-cost airline. It is only six years that the concept of low cost airline came into existence and it has taken almost 70 per cent of domestic capacity. Consumers can expect a full service in the future.
In the consumers view point the airlines must give them what they want and this is the only mantra for a sustained growth. Customers are satisfied with on-time reliability and on-time arrival. We can find that the low cost airlines are taking care of that and on-time performance carriers like Paramount and IndiGo have been far better than that of the full service carriers.
There are no special features or frills; these low cost airlines have focused on reliable performance and offer business class ambience at affordable prices. The consumer report shows that Paramount Airways is very popular with corporate. However it is clear that the airline industry is gearing up for a period of good growth.
Centre of Asia-Pacific Aviation (CAPA) predicts that the domestic segment is likely to show a 15 percent growth in the coming two years. The international airline growth is also expected by ten percent, Boeing India expects orders of 1000 aircraft worth $100 billion from Indian companies in the next 20 years.
All the optimistic hopes lie on the assumption that the crude prices will not rise again. The airlines will be able to manage the costs and there are enough chances for the growth of all airlines. In the United States there are three aircraft seats per year for its 300 million populations and while in India, for its 1.17 billion populations there are only 0.1 seats available.
This area has a lot of opportunities available in India for the airline sector to enhance their growth. Once people have travelled by air how many will want to get back to rail or bus? Almost five years ago eight percent of the consumers used to travel for business purposes, today the figure is reduced to half for that purposes. As the airport infrastructure and connectivity improves, aviation sector will show a great growth in the coming years.
Most of the airlines are planning for big changes. SpiceJet and Paramount flies abroad and they expand their footprints nationally. GoAir is planning to emerge with twelve new aircraft in the next two years. All the changes shows that Indian carriers are getting ready to have a big take off.