Air India Soars on More Promotional Schemes

India’s aviation industry is currently witnessing a big fare war. When it comes to natural air fare war, it seems that the senior most Airline in the country, Air India, often has a leg up on new airlines. Air India does not want to lag behind. It intends to defeat all its rival airlines and attract passengers through lowest fares. The end user, the flier, has no complaints.  The flier does not see anything wrong with AI’s increased publicity campaigns.

So many plane players…. Air India is one of them.

“It’s tough to fight in terms of market share as the private airlines are adding capacity at a frantic pace. As a government airline, we don’t have the luxury to do so,” says a top official of the Air India. Aiming to attract more fliers and achieve higher seat occupancy in its flights on trunk routes, National carrier Air India has decided that it will be providing “unbeatable metros fare” to domestic passengers willing to return the same day from July 25, 2016.

Air India is now realising that it needs to market itself and grab visibility. It is pulling out all the stops in its high-decibel promotional offers and advertising campaigns. As part of the pricing strategy, Air India will drop fares on four key routes, Delhi-Mumbai, Delhi-Chennai, Delhi-Kolkata and Delhi-Bengaluru, for tickets booked four hours before departure. Air India has an average load factor of 74 per cent across its domestic network while the seat occupancy on these routes is around 80 per cent.

Speaking to media, S Venkat, Air India Finance Advisor, said, “We are going to introduce new scheme for our all passengers who want to return same day flights in metro cities. Fares will be minimum Rs 5,000 and maximum Rs 10,000.”

“This is very attractive fare for all passengers. I am sure this scheme will attract the flyers as the fare is affordable. Earlier, we had launched “equal to Rajdhani fare” scheme, which had received good response. Now, we are launching the special fare scheme,” he added.

Last month, Air India had floated a scheme to fly unconfirmed passengers of Rajdhani trains at fares matching with the AC first class ticket prices. A Mumbai-Delhi air ticket is now available upwards of Rs 3,700 for next day travel on all airlines, while a Rajdhani AC first-class ticket costs Rs 4,755.

These have resulted in improved sales and better engagement with the trade. Ticket sales are rising on travel portals. Air India is engaging with agents and is implementing more customer-friendly initiatives. AI has also agreed to agents’ requests for web parity in fares, offering the same levels on its website and other portals. Thus, bookings for AI this year on travel portals like NC Airways, have increased with especially strong growth in long-haul international flights.

In FY16, the airline cut its losses to Rs 2,636 crore from Rs 5,859 crore in 2014-15, mainly due to a Rs 2,754 crore saving in fuel. “Fuel, of course, helped but I believe the turnaround has been due to efficiency in the management. We are now running the house like a proper corporate,” says Ashwani Lohani, Air India’s CMD.” He is of the view : “A professional firm cannot function on crutches. We want to fly, fly and fly more.”

Air India’s decision to reduce fares is likely to leave its rivals uncomfortable as they have been accused of raising the fares by 2-3 times for last-minute bookings.

Will Air India Ever Emerge Out of the Woods?

“Air India’s turnaround is a tough task,” says  Air India chairman Ashwani Lohani. 

The government is trying very hard to help Air India come out of the woods.

The profits of debt-laden national carrier Air India are weathered basically by immense interest costs and airport charges while increasing competition from budget carriers is slowing down its business.

Air India was given a Rs 3,02,310 million lifeline by the Union Finance Ministry in 2012 under a Turn Around Plan (TAP) over a period of 9 years to keep it alive.

“As per the 2012 TAP, the government will infuse Rs 1,89,290 million for repayment of government- guaranteed loans/interest till FY 2010-21,” Minister of State for Civil Aviation Mahesh Sharma has said. The government has already approved Rs 17,130 million equity infusion into the carrier for the current fiscal in line with TAP. This equity infusion also includes the financial support towards repayment of principal as well as interest on government-guaranteed loans taken for aircraft acquisition by the airline.

Mahesh-Sharma, Union Minister of State for Civil Aviation

Till March, the government has already infused Rs 2,22,800 million into the carrier as part of the bailout package.

In April, Minister of State for Civil Aviation Mahesh Sharma informed the Parliament that Air India may trim losses by more than half to Rs 26,360 million in FY16 as compared to a net loss of Rs 58,599.1 million in FY15.  

A reduction in loss is the only notable performance for Air India to show during the past one year. This, too, was achieved when the ATF prices were low and the passenger demand was high which also benefited other airlines. 

Despite all these efforts, the Air India CMD Ashwani Lohani says that turning-around Air India is a tough task. 

“To wipe out all of Rs. 2,80,000 million of accumulated losses is a “tall order”. It will take decades to wipe that off.” Lohani said.

All he could say at present: “The airline is looking to become ‘profitable on a year-to-year basis’ in the next three years and not seek any government money beyond the Rs. 3,00,000 million already sanctioned.”

Insiders spoil the show.

Yesterday, Air India was forced to suspend its entire passenger loyalty rewards programme.

Nearly 0.2 million Air India dedicated customers will lose out on benefits. The programme called Flying Returns had 1, 95,000 frequent flyer accounts, but it is yet not clear how many flyers were actually affected. Frequent flyers do not know how the points they will gain while flying during the suspension period will be credited to their accounts. All the affected membership accounts have since been suspended. The entire set of user IDs which have been dormant since the last three months have also been deactivated.

Unscrupulous hackers had stolen loyalty programme points worth Rs 1.6 million, as reported earlier in these columns.

As suspected at the beginning of the investigation by Delhi police, it was an insider’s job, the programme was hacked into, administrators’ control taken over.

The matter first came to light on June 8, when an Air India staffer verifying documents, noticed that one account was already verified by another employee. The document submitted as identity proof was a driving licence, something not on the list of accepted proof. Air India accepts passport, PAN card, voter ID or Aadhaar card as identity proof from customers. Further the driving licence was also found to be fake and an internal probe showed 23 such fake accounts.

The hackers have accessed user IDs and passwords of some of the website administrators to verify several such fake accounts and claimed frequent flyer rewards. The cops investigating the matter said,”The hackers had managed to sneak into several accounts of Air India employees. This is clearly a well-organised crime and we are analysing all possible angles.” 

The Delhi Police has said that such an incident was “entirely preventable” had Air India carried out periodic anti hacking drills as mandated by the International Air Transport guidelines. Alarmed officials from the Civil Aviation Ministry have now asked all Indian airlines to conduct cyber safety drills.

Inconvenience to  passengers.

Air India has been penalized by the district consumer disputes redressal forum of Vadodara recently for causing inconvenience to a passenger. The airline was asked to pay a fine of Rs 25,000 by the consumer forum that also pulled up the management for deficiency in service and unfair trade practice. P V Moorjani, who was one of the passengers on the Vadodara-Delhi flight of Air India had filed a complaint against the airline in 2009.

Exodus  of Air India Pilots Imminent.

Air India’s Boeing 777s fly the farthest in the airline’s network – including on the Delhi-San Francisco route which is one of the longest non stops in the world – but its pilots face a 10% cut under the new pay structure. Now, Air India stares at an exodus of these pilots to foreign, especially Gulf carriers, who are offering them with 1.5 times their present pay, tax free.

No wonder then, despite all his sincere efforts, the Air India CMD Ashwani Lohani says that turning-around Air India is a tough task. The present scenario being 1 step forward, and 3 steps backwards.