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Airlines brace for dogfight

Rumi Dutta in Mumbai | August 03, 2004 08:00 IST

Call it competition, but the freebies for air passengers continue to fly in. Air Sahara is now planning a blanket coverage of small towns.

It plans to increase the frequency of its flights to the hinterland by 50-60 per cent in the current year. The airline will also introduce the hub-and-spoke system, with metros as hubs.

Passengers flying from a metro to another and then to a small town could perhaps pay the standard fare on the metro leg of their trip but a far lower fare on the leg to the small town. State-owned carrier Indian Airlines had introduced this scheme recently.

Air Sahara is also working on an upgraded frequent flier programme, apart from introducing innovative in-flight services, including increased entertainment. Air Sahara executives, however, refused to disclose the details of the frequent flier programme.

Jet Airways recently upgraded its frequent flier programme, and is focusing on its yield-management strategy. The airline is seeking to lure passengers who fly less frequently. Under this scheme, if the airline believes that seats won't be occupied on a flight, it will offer them at lower rates.

You can now jump onto the Indian Airlines frequent flier club with a single boarding pass. Indian Airlines's frequent flyer club earlier had a Rs 1,000 enrollment fee.

That gave way to the three boarding pass norm. Now passengers need to fly just once and produce a single boarding pass to qualify for the frequent flyer club.

The Indian Airlines frequent flyer programme has been merged with Air-India's programme to enable international passengers earn mileage points. If you fly Indian Airlines, you'll get Air-India mileage points, though the offer is valid only till September.

Drawing a leaf from Jet Airway's yield management programme book, Air Sahara is planning to launch a 'dynamic fare' model. Under this model, fares will be based on the daily market demand. In short, Air Sahara, too, will sell seats at lower fares if they are not in demand.

All this is over and above the competitive fares that are giving the railways a run for their money.

What's behind this flying frenzy? The scheduled carriers are bracing for competition from no-frills carrier Air Deccan and a host of airlines waiting in the wings.

Airline experts say around nine low-cost carriers have applied for licences and are taxiing for take off. These include UB group's Kingfisher Airline, an offering from Bombay Dyeing, Yamuna Airways and Indus Air.

Says an Indian Airlines source: "It is a compounded effort to take low-cost carriers head on. Be it in terms of fares, service, miles or network expansion, we have to adopt a dynamic approach to retain our market share. Moreover, it is too early to judge the ability or success of the low-cost carriers."

Adds an Air Sahara executive: "Besides our discounted fare schemes, far superior connectivity with metros as hubs will enable us to fight any kind of competition. Our quality service and new generation fleet will give us an edge over low-cost airlines."

According to industry officials, airlines compete primarily on three fronts -- low fares, customer service and value-added services like frequent flier programmes. While low-cost carriers fight on the price platform, service is something their larger counterparts are harping on.

Already, Air Deccan's fares are 30 per cent lower than the better known carriers. While its operations are currently restricted to flights among smaller cities, it plans to take on the biggies with new aircraft connecting major metros. It recently announced fares as low as Rs 500 (plus Rs 200 as taxes) on the Mumbai-Delhi sector. It just can't get better than this.

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