GR Gopinath, the pioneer of low-cost airlines in India is currently looking at a second chance if rumours are to be believed, to operate an airline company set to take off around mid 2013. Even as airline companies struggle in a segment that fails to recover costs, the airline industry sees a list of new entrants in the low-cost airline segment. Are we in a vicious circle or will it work this time around?
What do passengers want from a low-cost airline?
On-time arrivals and departures
Ensuring safety and careful handling of baggage
Intra-state connecting points to also help regional passengers
Smooth operator of flights
A basic set of beverages and snacks (Ones that are easier for clean up after landing)
Great onsite and offsite customer care
Care for passengers with special needs
Herb Kelleher, founder of Southwest Airlines in US has a philosophy that makes their budget airlines flourish as the largest profit-making airline in this segment today. He focuses on four major elements which he claims as the key to associate the words low-cost and airlines in the same sentence.
Four major elements
Costs, Plane, Time, Offers
Costs – Most airlines in this segment in India struggle to manage costs. The best way to cut costs every single year is by negotiating better with providers of insurance, fuel and other products for better rates.
Plane – Use only one type of aircraft. Many international players today invest in newer aircrafts that have better seating capacity and fuel efficiency. Investing and utilizing one single aircraft cuts costs in fuel that will take up much less than the current 40% of operating costs, allowing easy maintenance of aircrafts and lesser number of planes to be serviced.
Time – Airplanes that carries passengers from point A to point B must eject itself both at the time of takeoff and landing as quickly as possible. How do you do this? Simply by allowing passengers to grab assigned seats with a “first-come, first-serve” policy and not selling products in-flight that make it harder to clean up after landing.
Offers – Do not sell anything other than seats. Cut loyalty programs and miles benefits. For low-cost airlines, price is the best form of loyalty earned.
The minimum required service levels are not delivered by most budget airlines today. Thanks to globalization, Indian passengers know the standards set by budget airlines in other countries and have similar expectations in India. Foreign players do not provide over-the-top facilities to customers.
Instead, they focus on providing the basic needs as best as they can facilitated by technology that handles the work of dozens of people. Such fulfillment’s create an impression of flying first class in the minds of consumers as opposed to highlighting the differences between flying on budget with few good services than premium airlines with lot of services.