Exclusive Aviation Survey (Part 2)
Are Indian carriers reading the market correctly? Is the potential to increase fares real?
Three years into India’s rapid liberalisation of its aviation market, and most Indian airlines are continuing to lose large amounts of money, resulting in the consolidation currently sweeping the industry. Yields have been consistently insufficient to deliver even the smallest profit.
On this topic, our recent aviation survey raised a key question: is passenger resistance to upward pricing real or perceived? Our findings may surprise an airline yield manager or two:
- 67% of FSC passengers chose their flight according to a convenient schedule or a previous experience, as compared to 9% of FSC passengers whose choice was based on price.
- 38% of LCC passengers chose their flight according to a convenient schedule or a previous experience, equalling the percentage of LCC passengers (38%) whose choice was based on price.
These survey results suggest that the aviation industry in India could potentially sustain fare increases by all carriers. There is a particular message for FSCs: a large number of passengers value features such as frequency, flexibility, reliability, and in-flight service, and are prepared to pay for them.
Next Week: Prestige, loyalty, distribution, and FSCs.