Wednesday, November 30, 2011

Flying Straight

The common sense approach to my earlier post in resolving the crisis faced by various airlines after a systematic study are presented herein below :

Scenario 1 :  If the International airline had code sharing arrangement with Air India which was scheduled to depart in another 2 hours time, they would have saved the accommodation cost and reduced the inconvenience caused to the passenger.

Scenario 2 :  The airline concerned could have charged the difference in the fare which amounts to 37 k and accommodated the passenger since he was using their own flight.

Scenario 3 :  It is very to replicate this type of gesture unless the executives are trained to spot the crisis.

Scenario 4 :  Almost all passengers could have been accommodated in the four flights which took off on that day.  All the flights had 30 to 40% booking even assuming 8 flights were cancelled, if there was co-ordination among airlines all passengers would have flown without cancellation.  Majority of the passengers cancelled their flight because the rates charged were exorbitant.

Scenario 5 : Atleast accommodation could have been provided by the airline for the passenger who had to return to their hotel for overbooking.

Scenario 6 :  When airlines are unable to find customers or manage their schedules by code sharing some private enterprises would take charge of their business and messing it up further.

Scenario 7  :  If this airliner can cancel one flight and club two flight passengers they have saved valuable fuel and reduced their losses by 50%. The same logic can be carried forward in code sharing arrangements.

Scenario 8 :  The concerned airliner could have charged the difference and offered the customer the benefit of frequent flyer.  The regular tariff for this route is 25 k and the difference amounts to 13 k.

Scenario 9 :  Travel portal needs to pass on the benefit of no fees for postponement of ticket to frequent flyers

Scenario 10 :  Clarity on ticket pricing should be prevalent.  Dynamic pricing when there is demand amounts to black marketing which should be avoided.  Cancellation and postponement policy should be clearly mentioned on the ticket.

Considering the facts that airline industry is undergoing serious demand crisis, it is time for introspection of their policies.  Pricing of the tickets is the primary issue :

Basic cost without over heads :     Rs 2000/            60 days plus in advance      15%     30 seats

Costing with overheads covered:   Rs 2500/           30 days plus in advance       15%     30 seats

Cost plus profits                           Rs 3000/-          15 > 30 days plus                30%     60 seats

Premium Profits                           Rs 4000/-           Less than 15 days                40%     80 seats

An average realisation of              Rs 3175              100% occupancy

Cancellation charges                                              10% to 25% of the ticket value
Postponement                                                        No levy or 2% or difference in fare.

Well another scenario in case of  low demand equivalent to only 15 to 25% occupancy.  Than it is ideal to club the flights or use code sharing with other airlines.  This would result in grounding of 3 aircrafts and effectively only one airline will be flying turn by turn.  This would mean that losses for all the airline are cut, and it provides an opportunity for maintainence and upgrading skills of pilots.  It will cut fuel consumption by 3/4th which in turn will put pressure on the demand for crude.  Lesser the demand the crude prices are bound to plummet.  The pollution in the air will also be reduced considerably.

All the head honchos of the airline industry need to ponder over how they are going to manage their affairs during recessionery trend.  During boom times no one will be bothered to look into costing and code sharing.  Rather it would be a situation of managing over bookings.  When the flight is being over booked like in railways, it should be known that the passenger is aware in advance that he is booking against RAC.  Who knows safety norms permitting, We may find takers who are willing to stand and fly too for short distance Lolz.



Anonymous said...

this is one comprehensive study. cannot believe that someone like u actually read my blog :D.

Anonymous said...

nominated u