Flyers are spoilt for choice by sales from carriers, but these are taking a toll on revenues of airline. Vistara’s chief strategy officer Sanjiv Kapoor, who is seen as a proponent of flash sales, tells Arindam Majumder in an interview that these help airlines to stimulate demand. Edited excerpts:
How sustainable are deep discounts for an airline?
At least 10 per cent of the seats go empty during peak seasons. If a seat is gone, it is gone forever. To avoid wastage of seats, all airlines sell a certain number of seats at a discount. Flash sales essentially work to stimulate demand.
Vistara has started flash sales in business class...
What we are doing is tweaking the price. Rather than selling two seats at a high price, we sell six cheaper. It’s a question of maximising revenue.
Has that helped to stimulate demand?
We would not have continued with it had it not clicked. If you are in a market, you need to make offers, be relevant to your customers and advertise. These offers are a very effective advertising tool about destinations and frequency.
What’s the ideal way of increasing market share? Capacity addition or deep discounting?
With 10 aircraft, we are one-tenth the size of the market leader. We must find a formula to maximise the use of available assets. We can’t increase frequency because we don’t have the aircraft. So it's a balancing act. We do our work efficiently, after that what extra capacity is left has to be sold.
Last-minute discounts are the worst thing an airline can do. Many of Vistara's offers seem to be doing that...
I have been a proponent of not doing sales within 30 days. But unfortunately the market seems to have broken that rule. Falling oil prices encouraged airlines to take more risks. When competitors are doing it, I can't stay away.
Flash sales are also a way of generating working capital. Is Vistara in need of that?
Absolutely not. Our owners are blue-chip entities. Our funding plans are in strongly in place.