Cheaper meals, luggage allowance: Airlines woo flyers to own them directly

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Vistara, the country’s youngest full-service carrier, promises a reward if you directly buy your ticket from the airline - an extra five-kilo luggage allowance. That’s Rs 1,428 the airline is willing to forgo to directly own a passenger. In a similar effort, the country’s biggest private airline IndiGo offers an in-flight meal at half the price if you book your ticket through its mobile app.


With oil price moving north, airlines in India are increasingly turning active to grab a larger slice of the ticketing pie, instead of conceding it to travel agents. It also helps them to know their passenger better to build customer loyalty and promote ancillary products, thereby generating new revenue streams.


Selling a ticket through travel agents involves a high cost as they depend on global distribution systems to provide price and schedule data to passengers. These distribution systems, which enable the transaction between airlines and agents, in turn, collect hefty fees from airlines for handling the data, and then share the fees with agents.


In fact, recently Jet Airways decided to scrap the basic one per cent commission to travel agents, mirroring a similar decision by global airlines to cut cost. Jet’s sales and distribution cost are significantly higher than that of its global peers such as Delta, Singapore Airlines, and United.


“There is a direct benefit for the airline and the passenger if the ticket is booked directly with us. Also, we get to reduce our distribution cost, whereas the flyer gets access to our ancillary products,” a senior Vistara executive said.


Owning the passenger’s data also helps the airlines to connect with passengers in a more efficient manner. “Sometimes flyers vent their anger saying they were not informed of a flight delay. Actually, the airline doesn’t even have his/her mobile number as agents refuse to share passenger data with us,” a SpiceJet official said. “Travel portals are anxious that the airlines will directly market themselves to the customer,” he said.


Airlines in India have always been a laggard indirectly owning a passenger, compared to their global peers. While global majors like JetBlue, RyanAir, Southwest sell almost 90 per cent of their tickets through their own websites or apps, airlines in India have a minuscule share of around 25 per cent through direct channel booking.


An IndiGo official reasoned that an overwhelming number of corporate bookings happen only through travel agents and it is impossible to overlook any distribution channel the market offers. “If an executive is visiting on business, the ticket is booked through the partner travel agent of his office. The trend is similar for group bookings too,” he said. Though it is costly, IndiGo has taken a conscious decision to be present on all channels in the market, he added. IndiGo sells around 18 per cent of its tickets through its own channel, while the rest is through travel agents.


Travel agents disagreed that they are competing with the airlines in the distribution system. “I don’t think a Vistara or an IndiGo is competition for us. In fact, we are allowing them more access to the market. An airline has the job of flying its planes, maintain the fleet. If our distribution channels are stronger, it ultimately helps the airlines,” said Deep Kalra, founder and chief executive officer of Makemytrip, which has the largest pie of the online travel market.


Airlines hope that the tide may turn in their favour as the government looks to promote biometric entry. According to the proposal, flyers can use Aadhaar number to book their air ticket, which will be shared by the airlines with the airport operator to hasten check-in process through the biometric entry. Any technology solution that can make the passenger data available to the airline would be a game changer for the travel industry, said the SpiceJet official.


Sales Channel % Share
Airline website 37
Airline mobile app 7
Online travel portal 9
Offline travel agents 16
Travel management companies 21
Other channels 9

Source: International Air Transport Association

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