Air India: The middle path

National carrier Air India has positioned itself clearly between the full-service airlines (Kingfisher and Jet) and budget carriers (IndiGo, Spice and JetLite).

Kingfisher and Jet raised fuel surcharge by up to Rs 300 in early April because jet fuel had become expensive. But Air India refused to follow their example. As a result, its fares are now up to Rs 300 below those of Jet and Kingfisher, and 5-10 per cent higher than the budget carriers. (The budget carriers too did not increase the surcharge.)

On top of that, Air India has come out with discounts of up to 70 per cent on 41 short-haul routes like Agartala-Guwahati, Agatti-Kochi, Chandigarh-Delhi, Mangalore-Mumbai and Hyderabad-Tirupati.

The scheme is graded. Travellers who book 30 days in advance on these routes can get 70 per cent discount. Booking the ticket 20 days in advance can get 50-60 per cent discount. Lower discount is on offer if it is booked 10 days in advance.

Air India has recovered market share from full-service as well as budget carriers in the last one year. At the end of March 2009, its share stood at 17.1 per cent, up from 15.7 per cent in March 2008. The current pricing strategy and the discounts, say Air India officials, will help it regain a larger share of the pie.

Travel companies say the move by Air India has been effective at least in the short term. “Its numbers have increased and there has been some shift from the other full-service carriers to its flights. Advance bookings have also improved,” said Bhawna Aggarwal, the co-founder of travel portal Yatra.com.