Faced with revenue headwinds, airlines go extra mile to win customers

From refreshed menus to revamped lounges, AI-backed chatbots to inflight Wi-Fi, airlines are going the extra mile to win customers. These initiatives come amid increased capacity and intensified competition in the Indian skies.

Take, for instance, Air India’s latest offering which it announced on Friday. Under the ‘Fly Prior’ service, customers can opt for an earlier flight on the same travel date. While the service will be offered free of charge to top-tier members of its loyalty programme, other customers can opt for it by paying a fee.

The move will help Air India generate ancillary revenue and enhance customer loyalty.

For airlines, including Air India, this is crucial. Domestic passenger demand has normalised after a high base of 2023. Fresh capacity is being added in winter, and that is pressuring yields. Typically Indian carriers earn most of their ancillary revenue from cancellation and seat selection fees, as well as excess baggage charges. By offering new services, airlines are providing more convenience to customers and diversifying their revenue sources.

• Also read: Air India Express targets a 50% y-o-y growth in passenger traffic for FY25

According to aviation analytics firm Cirium, airlines are scheduled to operate nearly 3,200 domestic flights daily in November, which is 7 per cent higher on a year-on-year basis. 

On the international side, scheduled flights in November will see a 9.4 per cent increase compared to last year.

“Airlines are trying to differentiate themselves by introducing new offerings to widen their customer base and tap new markets. Service reliability and consistency are also essential to ensure passenger loads. The new offerings will make sense if the cost of providing them is lower than the incremental revenue they generate for the company,” said a former chief commercial officer of a domestic airline.

From Thursday, IndiGo will launch its “tailor made business product” on the Delhi-Mumbai route. This comprises new premium seats and specially curated meals.

By Januaryz, all flights between Delhi and Mumbai will have the new product called ‘IndiGoStretch.’ The service will extend to Delhi-Bengaluru and Delhi-Chennai flights from March.

“IndiGoStretch will create a desired option for many who are aiming to travel business, some of them seasoned and some perhaps for the first time in their life,” the airline’s chief executive Pieter Elbers said in a statement last week.

“IndiGo is strategically positioning its business class offering to compete with Air India. Given its strong domestic network and flight schedules - critical factors for corporate travellers - IndiGo now aims to capture a portion of the premium business travel segment. This shift will not only help boost revenue but also provide greater stability to IndiGo’s performance,” said Sunny Sodhi, managing director, FCM Travel, India.

While IndiGo has pivoted to a hybrid model, Akasa Air is sticking to an all-economy class product on its Boeing 737 Max aircraft. This has meant replacing comfortable business seats that came on eleven aircraft with standard economy class seats.

The Mumbai-headquartered airline is trying to win over customers with unique and varied meals options. Akasa Air, which introduced 45 meal options in June, said an extensive exercise was undertaken by the airline to understand customer preferences and dining trends. Another unique initiative is ‘QuietFlights’ where it keeps on board announcements to a minimum and adjusts cabin lighting for a peaceful experience in its late-night flights.

Last month, Akasa Air collaborated with TripFactory to sell holiday packages on its website. Air India Express, too, has partnered with MakeMyTrip to offer travel and stay options on the airline’s website and mobile apps.

“We are consistently working on enhancing our guests’ comfort and convenience through technology-driven services,” said an official from Air India Express. In the past few months, it has also introduced baggage tracking, fare lock and online visa services.

A former CEO of an airline said that introducing internet and additional services can only have a marginal impact on revenue, and scope to increase fares too is limited due to heightened competition. “Airlines will need to target costs and sharpen their revenue management strategies to improve earnings,” he said.