May 31, 2005
Boom time for low cost air travel in India
Last month was a hectic time if you were in the airline industry. As many as three budget airlines launched in May alone. First off the blocks was Air India Express. Vijay Mallya's pet project, aside from collecting Tipu Sultan memorabilia that is, Kingfisher Airlines launched a few days later. The latest entrant, and highly unlikely to be the last, is Spicejet. Of course, India's first budget airline, Air Deccan, is very much around.
Meenakshi Radhakrishnan-Swami writes in the Business Standard about how low-cost airlines manage to keep their costs low.
The flurry of activity in this sector as well as the effect of functioning in a nearly truly competitive marketplace like environment means that air travellers in India have a much wider choice now and can hope to benefit from lower prices. These airlines obviously target people like me, who are fairly happy travelling by train. I prefer travelling second class and occasionally upgrade to three tier air-conditioned class, especially when Krithi & Jaagruthi are also with me.
But of course, we'd love to be able to reach my destination in less than an hour rather than spend seven hours in a train at night, unsure of how Jaagruthi's sleeping pattern will be affected and resigning ourselves to losing out on valuable sleep in the process. The few times that I have been tempted into thinking about booking myself on Air Deccan, I've found out that while the cost of the ticket from Bangalore to Madras starts from Rs. 500, the tax that I'd pay on it is Rs. 200. Jaagruthi cannot travel for free on aircraft, unlike in trains, in spite of the fact that she won't get a seat. She gets charged 10% of the ticket cost. Perhaps carrying that extra 9 kg does cause a huge burden. So the one-way trip would end up costing us around Rs. 1500. In three tier a/c, the total cost would work out to around Rs. 1000. So we'd be forking out an extra Rs. 500 for the luxury of reaching Madras six hours earlier.
But it isn't that simple. For starters, when I land up at Madras (or anywhere for that matter) airport, the autorickshaw fellows assume I'm filthy rich and hence they have a right to seek inspiration from Robinhood. So their demands start at Rs. 200 and even after bargaining, you'd struggle to go beneath Rs. 150. And this is in broad daylight, not even at night-time. Hence the term 'daylight robbery' applies quite well. But if we travelled by train, even at 5 am, I can get home for Rs. 80 at most. So now, including the cost of the auto journey, travelling by air works out to Rs. 1650 while travelling by train works out to Rs. 1100 at most.
Of course, that extra Rs. 550 works out to 50% more expenditure and it needs to be weighed up against the value of the 6 hours we save.
But here's the clincher, and the main reason why it doesnt look too enticing to me. That cost structure is only if I book three months in advance. If I want to go from Bangalore to Madras in July, I will not be able to avail the discounted rates. Instead I could be forking out anything from Rs. 1000 to Rs. 2000 per ticket. Now suddenly, it doesn't look too good for the pocket, does it?
Air Deccan's new offer of tickets for one rupee sounds amazing. But you still need to fork out the tax of nearly Rs. 200! That is positively bizarre. Why isn't the tax you pay related to the value of the item (or service) you're purchasing? It is certainly the case with any departmental store.
I, for one, would seriously consider travelling by these airlines only when the tax issue is sorted out and when I dont need to book three months in advance for cheaper priced tickets. Unless you're an excellent planner or your life is perfectly in order or you are aware of say some family/friends get-together well in advance, I really cant see how many people can book three months in advance, especially when the cancellation penalties are so high.
Labels: airlines, aviation