Financial guarantee tor providing flights
In a first of its kind for domestic aviation in India, Air India has asked a city for financial guarantee to enhance air connectivity. The fliers from Surat were elated by news published that Air India will deploy an Airbus A320 equipment during evenings in addition to the CRJ700 service operated six days a week by its subsidiary Alliance Air DBA Air India Regional. What the newspapers have not reported is the financial strings attached to this announcement.
Air India is known to be running many loss making services in the domestic sector. While certain sectors are necessary due to inaccessibility by other modes of transport, there are a number of sectors where it is making losses and serving for political considerations alone. A glaring example is Vadodara, a neighboring airport near Surat. The private carrier Indigo operates 5 flights daily from Vadodara. Air India has placed its service at below cost only to ensure that fares to not go up in Vadodara and it relies heavily on passengers from Surat to use services at Vadodara.
Rather than curtailing services at Vadodara and deploying equipment at Surat to realise a higher fare, Air India has chosen to ask Surat for a financial guarantee to provide an extra service in the evening with an Airbus A320 Aircraft. This will allow fliers traveling in the morning to return same evening and also facilitate connections to more international destinations via Delhi.
Financial implications for additional Delhi - Surat - Delhi flight
Air India has indicated that if they operate the flight at 70% load, they will need a financial commitment for 118 seats. They have suggested a fare of Rs.3,400 including fuel surcharge but excluding taxes, UDF and PSF. The total would work out to Rs.4,500 per passenger. Air India will hold a meeting with travel agents soliciting financial commitments and ask them to collectively underwrite 118 seats that they may sell after adding their mark up.
Even corporate entities can bypass travel agents and strike corporate deals for their own requirements. Say a corporate will have a group of 3 or 4 passengers traveling daily, they can strike a such a deal.
Assuming there may be 60 regular travel agents including sub agents operating in Surat, each one should be confident of selling 2 seats per day. As a group we cannot enter into contracts but we can suggest to members to put in a word to their travel agents or to their company management to strike a deal with Air India. This fixed price will ensure there is no exodus to neighboring Vadodara where the major operator serving that airport is known to resort to predatory pricing to drive away operators wanting to serve Surat.
We request our fliers to cooperate by flying from Surat itself and of course have a word with your travel agent.
Air India requires Financial Guarantees from Surat by Surat Aviation is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
In a first of its kind for domestic aviation in India, Air India has asked a city for financial guarantee to enhance air connectivity. The fliers from Surat were elated by news published that Air India will deploy an Airbus A320 equipment during evenings in addition to the CRJ700 service operated six days a week by its subsidiary Alliance Air DBA Air India Regional. What the newspapers have not reported is the financial strings attached to this announcement.
Air India is known to be running many loss making services in the domestic sector. While certain sectors are necessary due to inaccessibility by other modes of transport, there are a number of sectors where it is making losses and serving for political considerations alone. A glaring example is Vadodara, a neighboring airport near Surat. The private carrier Indigo operates 5 flights daily from Vadodara. Air India has placed its service at below cost only to ensure that fares to not go up in Vadodara and it relies heavily on passengers from Surat to use services at Vadodara.
Rather than curtailing services at Vadodara and deploying equipment at Surat to realise a higher fare, Air India has chosen to ask Surat for a financial guarantee to provide an extra service in the evening with an Airbus A320 Aircraft. This will allow fliers traveling in the morning to return same evening and also facilitate connections to more international destinations via Delhi.
Financial implications for additional Delhi - Surat - Delhi flight
Air India has indicated that if they operate the flight at 70% load, they will need a financial commitment for 118 seats. They have suggested a fare of Rs.3,400 including fuel surcharge but excluding taxes, UDF and PSF. The total would work out to Rs.4,500 per passenger. Air India will hold a meeting with travel agents soliciting financial commitments and ask them to collectively underwrite 118 seats that they may sell after adding their mark up.
Even corporate entities can bypass travel agents and strike corporate deals for their own requirements. Say a corporate will have a group of 3 or 4 passengers traveling daily, they can strike a such a deal.
Assuming there may be 60 regular travel agents including sub agents operating in Surat, each one should be confident of selling 2 seats per day. As a group we cannot enter into contracts but we can suggest to members to put in a word to their travel agents or to their company management to strike a deal with Air India. This fixed price will ensure there is no exodus to neighboring Vadodara where the major operator serving that airport is known to resort to predatory pricing to drive away operators wanting to serve Surat.
We request our fliers to cooperate by flying from Surat itself and of course have a word with your travel agent.
Air India requires Financial Guarantees from Surat by Surat Aviation is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Add to that people choosing to fly from BDQ still have to incur the costs involved in travelling to nearby airports which will sum up the fare that's available from STV itself along with the time factor too. Comparing to 4500/- that AI would be offering at STV even if the one particular airline still offers the fare of 3500/- from BDQ, it would cost you morte than 4500/- that AI is offering from the comfort of your hometown airport.
ReplyDeleteIf you opt for availing low fares from other airport you have not just cost for transport. Remember your time costs money and driving is risky. If you miss your flight you lose the fare and you have to buy other options at high cost. Not worth while torturing yourself to favor an airline that disregards you as a passenger by not setting up station at your city.
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