Environmental Costs To Increase Prices Of Cheap Air Tickets

Global aviation faces many challenges and foremost among these is the challenge of meeting the environmental concerns related to aviation. With increasing demand for cheap air tickets and the rapid growth of the global aviation on one hand and the deepening environmental concerns on the other, the aviation industry is caught between two opposing forces. Since fuel prices and factors for improving the fuel economy are responsible to a large extent for price determination of tickets, airlines do not have commercially viable alternatives to bank upon for meeting environmental concerns. 

It has been understood that rapid technological development which encourages conservation of fuel and increases the fuel economy of airplanes is the only solution to meeting both these seemingly divergent ends. Other mechanisms such as carbon trading are also aimed at quantifying the aviation emissions, determining the best practices to minimize these emissions and even trading these by seeking to cut down these emissions from other emitting products by infusing technology.

Skeptics fear that if the technological measures to control emissions are incorporated in airlines, then the prices of the flight tickets are likely to rise. This is so because the technology is expensive. Though the running costs will increase due to higher fuel economies, the cost of manufacture and, hence, of its financing will increase, more than offsetting its gains. Further, if the alternative fuels are to be used, the question of sustainable use to a large extent will not be easy to address.

So, as of now, there does not seem to be a way ahead which could address both these issues of technological infusion and of meeting demand for cheap air tickets on a commercially viable scale.

Relevance of Flight Status And Media Of Delivery To Users

The real time information about flight status is helpful to passengers, near and dear ones of the passengers, air traffic controllers (ATCs) and the emergency rescue teams for their respective needs. The passengers in the flight would like to know it so as to prepare themselves for disembarking from the plane. The near and dear ones would like to know the arrival or departure times so as to reach the airport in time. ATCs use this information to ensure that the airspace traffic is managed properly and accidents are avoided by conveying instructions to the pilots. In case of any mishap, this information helps the rescue teams to pinpoint the location where the mishap has happened enabling these to reach the spot without wasting time.

Flight status is determined on the basis of the location of flight in terms of longitudes and latitudes and by being in regular communication with the crew. Using the radars or global positioning systems, this location can be ascertained and by being in touch with the crew, what is happening during the course of flight (weather, in-flight conditions, etc.) can be known. Both these elements together form the flight status information.

These days there are many ways in which this information can be provided to you. It could be done by the airline, agency or airport. It can also be provided by third parties using the software tools which aggregate this information from different sources for the convenience of viewers and deliver this information through various media such as their websites. Nowadays, the delivery of this information is also done by way of SMS to the mobile phones of the users. So, you do not use the computers or mobiles only for searching and booking the cheap flight tickets but also for getting the information of its real time status. The users are required to first send the SMS to the provider in a specific format which tells the airport code, airline code, flight number, date of flight and whether information is required for arrival or departure. Besides these methods, the traditional method of calling the airline of the airport is another way of ascertaining the status of flight.

It shall be understood that flight schedule is different from its status since the former is actually a time-table of flights operation whereas the latter provides real time information on location and condition of the flight. Status is updated in real time whereas the schedules are fixed. Status can be know for that very moment of time whereas schedule is drawn up before starting the flights between the sectors, so these are not likely to change in short term and frequently.

FAA Puts Indian Aviation Under Scanner For Safety And Regulatory Reasons

The continuing turmoil in the Indian aviation industry has had its impact internationally. This impact is no longer confined to the numerous problems faced by the customers but has taken a far more serious turn with the safety of airplane and people becoming a major concern. FAA of USA, the top agency which audits the safety parameters of airlines worldwide and rates them on the basis of safety has put the Indian aviation on notice by seeking to downgrade the rating of the country to Category II level. Arguably, the reason for this measure lies in the weak institution of the top regulator, DGCA.

Safety and security of the aircraft and the passengers is the first and foremost priority for any airline. Whatever is the business model of the airlines, whether it offers cheap air tickets as LCC or not, no compromises are made on the safety related aspects of airline. The airworthiness of airplanes is maintained and expenses to that effect are never cut since it would figure in the audit and is not likely to be seen in good light. All the repair and maintenance operations are done on schedule and as per the defined scope. However, if the airline is facing continued financial problems then there might be tendency to skip these operations. This puts question mark over the safety of airline for its airworthiness. For this reason, the airline facing financial issues are put under scanner and more detailed checks on airworthiness of aircraft as performed.

All these concerns are to be taken care of by the regulatory body and this is possible when this authority is strengthened. FAA views the institution of DGCA as not completely free to function independently and capable of taking decisions which put safety and security of airlines on top priority.

A downgrade is likely to reduce the air ticket booking on domestic airlines since the passengers will lose the confidence of flying safely. Though its impact is not likely to be far reaching in domestic sector, it will certainly hit the international credibility of Indian aviation.

Air ticket booking and pricing gets more transparent with OFT enforcement

Airlines have long been accused of not making proper disclosures of the prices of air tickets to consumers at the time of starting the booking process. Often, there is a difference between the prices which are advertised and what the customer eventually has to pay at the end of the air ticket booking process. Besides, some charges are hidden, meaning that the exact heads in which these are broken are not disclosed to the passengers. The Office of Fair Trade (OFT) in UK has sought to put an end to one of these practices. It has issued an enforcement action to put an end to the practice of hiding the debit card surcharges until the payment is about to be made.

Twelve airlines have agreed to include the charges of debit card in the headline prices instead of mentioning these as surcharges at the end of air ticket booking. The charges for credit card can still be allowed to be charged as surcharge but these need to be mentioned at an early stage of the booking process. With more transparency in the pricing structure, passengers would be able to know how much are they being charged for and by mentioning these clearly in the marketing materials, advertisement and websites, the airlines would not be able to surprise them at the end of booking process.

This issue was a longstanding demand of consumer groups who wanted airlines to tell the actual price of ticket clearly in the initial stages of booking cheap flight tickets by including the card charges in the fare rather than charging these as surcharge close to the end. Even before the ruling was out, the airlines are including these charges in their front-end prices, be it their websites or marketing materials. 

IATA Reports Decline In Premium Segment Travel, Booking Of Cheapest Air Tickets Rises

Premium segment travel is widely taken to be the non-economy class travel on the full service providers. Besides this, it does not include passengers travelling on the low cost carriers. So, all the first or business class travelers come under this category of flyer segment. The latest IATA report has confirmed a decline in the premium class travel on airlines. Though this has been attributed to the recessionary tendencies in the world economy since 2008 from which the businesses worldwide have not recovered fully, the recent crisis in European economies has also contributed significantly to decline in the business and first class travelers. The market is down by about 8 percent from the 2008 levels. People are now more inclined to buying the cheapest air tickets.

It is noteworthy that the markets in North America and Europe contribute a big proportion of the global premium segment flyers, about 40 percent of total premium segment of world and 34 percent by revenues. With corporate bodies downgrading the air travel of their employees to economy class and even the business travelers also doing air ticket booking for economy class travel, the crunch is premium segment is expected to hit the full service carriers as this segment is pivotal to best yield management practices.

If this trend continues and the airlines keep on generating less revenue, there could be a rethink on the part of airlines to offer different classes of travel. This trend is also being witnessed in India where the full services carriers are facing difficulty in having profitable operations whereas the LCCs have garnered most of the domestic market share. The dip in premium class travel is also being witnessed in India as more people prefer to save on air ticket booking by travelling economy. 

Indian Ministry Suspects Foul Play In Price Rise of Cheap Flight Tickets, Orders Investigation

With the chips being down for Kingfisher Airlines and Air India that has led to crunch of seats availability for meeting the demand of air travel in domestic and international sectors, the prices of the other operating carriers have been rising steeply. The rise is particularly steep as compared with the similar prices last year and even after discounting the factor of fuel price rise.

The office of Director General Civil Aviation (DGCA) had issued advisories in past for airlines to keep prices within reasonable and rationale limits. The pundits of economics refuse to see anything fishy about this price rise and argue that due to the market conditions of more demand and less supply, it was natural for airlines to increase the prices of air ticket booking. However, the Ministry of Corporate Affairs sees it differently and has suspected formation of cartel by the airlines for increasing the prices under the usual alibi of market conditions. Thus, it has asked the Competition Commission of India (CCI) to investigate into price increase.

The main reason of suspicion is the coordinated price rise of otherwise cheap flight tickets by all airlines in last couple of months which give hints of cartel formation. The air fares have soared to about 50 percent on many routes in the past two months and this has been done by all the airlines. While the law draws distinction between the coordinated price rise and cartelization, both of these activities are prohibited under the law since these are unhealthy for competitive market conditions. Formation of cartel for increasing prices is done deliberately as a well considered measure to ward-off competition since there is a mutual collusion among the players. However, this puts customers at a disadvantage since instead of getting competitive cheap flight tickets, they get the rigged prices. 

How are interline agreements for air ticket booking are different from the code share agreements?

You must have heard of the code share agreements between the airlines. As a result of these agreements amongst the airlines, you do air ticket booking on one flight but are flown on the other airline, which might surprise you when you take the boarding pass. The code share agreements are quite common among the airlines. These give the benefits of extended market reach and better seat factors to the airlines. However, the interline agreements are relatively rare as compared to code-share ones. Both these types of flights can have flight numbers different from the one of primary airline. But, there are some basic differences between the two.

In case of the code share flights between the source and the destination in a multiple-leg trip, the flight number of each airline with passengers is different. But, in a similar situation, the interline agreement provides the same flight number for all the airlines.

Another major difference between the two is that the code share agreements allow for honoring the frequent flyers programs of airline on which cheap flight tickets are booked with the code-share partner carriers. So, when you are flying on the code share flight, your miles will keep on getting aggregating. Further, you can redeem these points on these carriers as well. But, in case of interline agreements, the rewards programs of booking airline are not honored for those segments of journey whose flights do not have code share agreement with one another.

Yet another difference is with respect to the baggage which needs to be checked-in. In case of code-share agreements, the baggage needs to be checked-in at each segment of flight since these are treated as separate flights. However, in case of the interline agreement, the baggage follows you wherever you go obviating the need for checking-in all the time.

Price of Cheap Air Tickets Soars As DGCA Says All Is Fine

For all the airlines to operate in India, it is mandatory to provide to DGCA information about the price band within which these would be offering their flight tickets to the customers. While the airlines supposedly strive to provide cheap air tickets, it might not be the case in reality always. India has liberalized the aviation sector and allowed the private bodies to operate airlines.

 However, it has not yet allowed the foreign direct investment in the sector. The entry of private players was allowed for reasons of catering to the increasing demand of flights in the domestic sector and for developing a healthy competitive playing ground.

However, airlines operating in Indian conditions have often flown into rough weather due to a number of challenges arising out of environmental factors which many of the carriers find difficult to operate in. The high rates of taxation on aviation fuel, a generally price-sensitive market and labor-management issues have all led to exit of many carriers from domestic operations, leaving only a few in the fray. This has reduced the competition and also led to reduction in the number of seats available to the people. These market conditions have led to situations of less supply and high demand which has contributed to increase in air fares as compared to same period last year. Even the low-cost carriers have revised the prices of their tickets upwards substantially as compared to last year.

The steep increase has led to DGCA looking into the matter. It has been found on random checking that the airlines are still operating in the price-band which they had submitted to the DGCA. Earlier, the DGCA had asked the carriers to reduce the prices of tickets since the prices of oil had come down but there was no marked reduction in air fares. DGCA has been acting as a watchdog to ensure that the flight booking does not become prohibitively expensive for travelers with the curtailment of flights by Air India and Kingfisher. 

Indigo Airlines features in latest Skytrax Awards For 2012

Skytrax recently announced the latest 2012 airlines awards. Here are some of the main categories of these awards and the top three recipient airlines of each of these.

	WORLD’s BEST...
Airline of the Year Qatar Airways Asiana Airlines Singapore airlines	Best Leisure Airline Air Transat Thomson Airways Monarch Airlines	Inflight Entertainment Emirates Cathay Pacific Singapore Airlines
Best Cabin Staff Malaysia Airlines Asiana Airlines EVA Air	Most Improved Airline China Eastern Transaero Airlines Virgin Australia	Best Airline Alliance Star Alliance Oneworld Alliance Skyteam Alliance
	BEST BY CABIN
Best First Class Airline Etihad Airways Singapore Airlines ANA	Best Business Class Cathay Pacific Airways Qatar Airways Oman Air	Best Premium Economy Class Qantas Airways Turkish Airlines Air New Zealand
Best Economy Class Singapore Airlines Qatar Airways Asiana Airlines
	BEST BY REGION
Africa South African Airways Kulula Air Mauritius	Asia Asiana Airlines Singapore Airlines Cathay Pacific Airways	Australia/Pacific Virgin Australia Qantas Airways Air New Zealand
China Hainan Airlines China Southern Airlines Air China	Central Asia/India Air Astana Indigo Airlines Jet Airways	Europe Turkish Airlines Lufthansa Swiss International Airlines
Middle-East Qatar Airways Etihad Airways Emirates	N. America- International 1.  Air Canada 2.  Delta Airlines 3.  United Airlines	N. America-Domestic 1. Virgin America 2. WestJet 3. Alaska Airlines
South America TAM Airlines LAN Airlines Azul Airlines
	BEST REGIONAL AIRLINES
World’s Best Garuda Indonesia Dragon Air Aegean Airlines	Asia’s Best Garuda Indonesia Dragon Air Bangkok Airways	China’s Best Shenzhen Airlines Tianjin Airlines Sichuan Airlines
Europe’s Best Aegean Airlines Air Nostrum Baboo Airlines	North America’s Best Alaska Airlines jetBlue Airways American Eagle Airlines	South America’s Best TIP Linhas Aereas Sky Airline
	BEST LOW-COST AIRLINES
World’s Best AirAsia Virgin America Jetstar Airways	South America Azul Airlines GoL Webjet	North America Virgin America Westjet Southwest Airlines
Central Asia/India Indigo Airlines Spicejet Jetlite	Europe easyJet Norwegian NIKI	Australia/Pacific Jetstar airways AirAsiaX Tiger Airways Australia
Asia AirAsia AirAsiaX Jetstar Asia
(source: Skytrax)

Indigo Airline becomes first to use RNP for saving fuel

Low cost carriers operate on a no-frills approach and their chief concern is to provide cheap air tickets to passengers. To meet this end, these carriers always aim to operate with maximum efficiency by minimizing wastages. IndiGo Airlines, India’s premier LCC with overall second largest market share has not hesitated to use effective measures which lead to efficient operations. The latest move of using the RNP, an acronym for required navigation performance, to make significant fuel savings has further corroborated the proactive approach of airlines in adopting new technology that can increase efficiency levels.

The use of RNP will not be beneficial only for Indigo airlines but it will also herald a new era in the air traffic management at the airports in India. By enabling the airlines to operate in an environment of contained and secure flight trajectories, RNP reduces the flight path leading to greater savings on fuel. The test flight of Indigo using RNP approaches at the Kochi airport has demonstrated that as much as 75 kilometers of flight was reduced from one approach. This means that fuel up to 400 kg can be saved on each such landing. This is quite a significant figure and when the number of flights landing each day at various airports of the country is to be considered, this becomes an enormous saving of fuel. This saving results in reduction of greenhouse gases and promotes the cause of greener environment. For the passengers, this could also mean further lowering of flight tickets prices.

But, how does RNP work? Actually, it is a performance based navigation system which utilizes on-board facilities for navigation monitoring and alerting. This system allows the aircraft to fly between two defined points using GPS systems. This also facilitates easier management of air traffic in non-radar environments. Another important feature of RNP is that it provides necessary flexibility for overcoming terrain obstacles in trajectories. 

FDI in Spicejet: What makes it favorable?

The government of India is mulling the proposal for introducing Foreign Direct Investment (FDI) in aviation sector for quite some time now. If and when it happens, FDI is expected to ameliorate the problems of airline companies to a great extent with the infusion of funds. However, with many airline companies reporting losses and some on the verge of being declared bankrupt, there is not enough encouragement for foreign direct investors to place their money on Indian carriers. FDI cannot be panacea for ailments plaguing India civil aviation. Spicejet is one of the major Indian carriers which are likely to benefit from the FDI. The main reasons for this are:

• Better regional spread than others: Amongst all carriers, Spicejet airline has a better spread of operations than the others in the domestic sector. In fact, this is a major factor which distinguishes it from its competitor, IndiGo airlines. Spicejet has major thrust in the south Indian region and does not take its flights to nearby international destinations except Kathmandu, Dubai and Colombo. It has better connectivity with the tier II and tier III cities.

• Good space for receiving FDI: The chief competitor of Spicejet, IndiGo, already had investments from US based company and there is not much further scope of receiving the FDI. All other airlines do not have a history of profitable operations which would make them lucrative for receiving FDI. Spicejet, thus, stands a unique advantage in this regard since it is expected to turn profitable by next year.

• Better growth projections: Spicejet is currently the number three player in aviation sector in India, behind Indigo airlines. It, too, has ordered for the aircraft to fuel its ambitious expansion expectations after Indigo airlines. However, it is better positioned to utilize its new aircraft for meeting those expectations. Making Delhi a regional hub and with clear focus on expanding further in North India presents a clear focus on priorities of deployment of new aircraft.

While Spicejet is a no-frill airlines which offers cheap air tickets to customers and is expected to perform financially better next year, it is a natural for being considered as a foremost FDI recipient. 

Why travel products sell online?

There has been a recent spurt in e-commerce business worldwide. A wide range of consumer products, branded or non-branded, are being sold from the online platform. Although the success of these online stores depends on a number of factors, some products, by virtue of their very nature, make for good online sales items. Travel products such as the cheap air tickets, hotels and holiday packages are some of these good online selling items. What makes these products good for online sales?

Customers Restricted from Seeing Products

Buying airline tickets is different from buying other consumer items since you can visit a retail outlet to see other products but not the airplane seats. Since there is no option of seeing the seats in real-life before buying the tickets, it does not make any difference whether these are bought online or offline. Since online medium of purchase is far more convenient and also provides all required information, it becomes the preferred medium of booking flights. The same is also true of the hotels and holiday destinations where the customers have restriction or limitation which prevents them from seeing these before buying.

Presence of Independent Credible Reviewers

Since you cannot see the travel products most of the time before buying these, who would you trust for advice and suggestions? There are companies which review and rate the different travel products and their suppliers on regional and global basis. These provide credible information resources for ascertaining the quality of travel product. Presence of these companies has facilitated online commerce in travel products.

Uniqueness and Localized Nature of Products

Travel destinations are unique in their own respect and localized in nature. These might have been replicated in different countries but are separated by great distances. The same is true for hotels and airlines as well. Due to their highly localized nature, it is not possible for people from faraway lands to see them in real and also, these products cannot be taken close to customers. So, selling of cheap domestic air tickets, lowest airfare international flights, hotels and destination packages is witnessing an increase. 

LCCs lose the cheap air tickets advantage in long run

Low budget airlines have been a successful business model worldwide by and large. The biggest impact that these airlines have made is to create new aviation markets worldwide, opening up new sectors of air connectivity as well as increasing the customer base of existing ones. Their main USP of cheap air tickets has made the hitherto reluctant people to take to aviation for reaching different places. While low fare flight tickets give the push into the new markets, there have been statistics to show that these airlines are not always able to maintain their price advantage in the long run.

Competition

The low budget airlines (also called LCCs) operate on simple pricing structure and on small margins of profits. Any factor which has the impact of increasing the prices of flight tickets puts these airlines in a difficult position as compared to network carriers. LCCs do face competition from other LCCs as well as network carriers. The latter, in order to protect their customer base, might respond with reduction in prices to a certain level. With considerable space for maneuvering the prices of cheap air tickets due to their yield management practices, the full service carriers are in better position to withstand the unfavorable times as well offer reduced air fares with better amenities and services. So, LCCs make regular carriers rationalize their tickets prices by raising the level of competition. In the long run, as the market matures, the LCCs tend to face stiffer competition from full service carriers and the magic of cheap air tickets does not work to their advantage to same extent as it happened in initial period.

Consumer Behavior

LCCs also see their cost-competitiveness being eroded over a period of time due to rise in incomes of the people as they seek more comfortable and luxurious flight experience. In the price sensitive markets, this might factor might not play a big role but there is a definite tendency to move to carriers with better amenities and services as the income levels rise. This change in consumer behavior is associated with the fast developing regions where prosperity levels increase. For the other sectors where economic growth is stagnant or laggard, there is no perceptible change in consumer behavior in long run.  

Economy class travel Vs budget airline travel with cheap air tickets

When you want to do flight booking for cheap air tickets, you might have to make a selection on which of the airlines you would like to travel. Since there are regular network carriers which usually offer choice of three classes of seating and budget carriers which offer only one class of seating, there is a good range of options to choose from. For most of the passengers, getting cheap air tickets is one of the prime concerns and therefore, a choice is often to be made between economy class seating of regular carriers or travelling by low cost carriers. What is the difference between these two ways of flying?

Economy class travel shall be considered as a watered-down version of the business class. It will have the least number of facilities provided to passengers and the in-flight experience of customers might not be as great as that of the higher classes. But, this does not mean that there will not be any services provided to the customers. There might still be the in-flight entertainment systems, regular meals services and other amenities but with some perceptible difference from the higher classes of travel. Higher levels might have greater privacy and comfort levels. Economy class can be taken even for long duration flights and there will be sufficient facilities to take care of your comfort for long distance travel. To what extent are the services and amenities in different classes varied from each other, is determined by the airlines. So, while cheap air tickets might still be got for flight booking done on economy class of travel, it might not be as cheap as it could be on a low-cost carrier.

Generally, the budget carriers provide flight booking facility with considerable dilution of services since their business is modeled on no-frills approach for short distance travel. You might miss the in-flight meals and entertainment systems and might even have to jostle up with your neighbor for seat space. There could be a number of other restrictions and limitations which are imposed for economizing the operations. You do get cheap air tickets but might have to make greater compromises than what you do by travelling on an economy class of a regular service airline.