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Thursday, November 5, 2009

Low Cost carriers

As per the reports in the newspapers, the 'cost per seat km' for full service airline carriers has come very close to that for the low cost carriers,and the fact is being celebrated as a great acheivement of cost cutting initiatives.But I feel that the comparison is not right as the benchmark of performance comparison is flawed.The so called low cost carriers of India can hardly be called so , when compared to the leader in such an industry. Consider Southwest Airlines which is a model and is discussed extensively in B-schools worldwide. How does it control costs? Some of the strategies that it follows,and which come to my mind as of now are given below:

  • A standard fleet of aircraft optimises maintenance and training aspects. Is there a lesson for IAF here that has so many type of aircraft in its fleet?
  • Turnaround time is just about 15 minutes. This helps in aircraft being airborne for more number of hours leading to more productivity. How much time do we take in turn around and in loading and offloading.Those of you who are students of military history will remember as to how this was used successfully by the Israelis in 1967 war.
  • Short haul flights obviate the need for in flight catering.Some of our LCCs continue to provide light refreshments onboard as a way of differentiating themselves from the other airlines. Remember that the cost incurred is not just that of the meal, but it involves the whole value chain that facilitates the meal for the customer. No wonder the airlines find themselves in the red.
  • The LCCs continue to operate to the congested airports where the landing and other charges are high. On the contrary , Southwest operates to smaller regional airports.There is a lesson for the government here to open more airports to civil traffic. I see no reason why the infrastructure, including the airspace used by IAF should not be shared in the larger interest of the nation.
  • Southwest does not allow baggage other than hand baggage. None of our carriers impose this restriction.Travelling light will not only lead to reduction of ac weight that will lead to lesser fuel consumption , but lesser time will be lost in luggage transfer and security checks.
The airlines in India could incentivise the use of the internet for booking or alternatively impose  a penalty for counter booking. This will reduce the requirement of having a counter at the airport , thereby saving costs. If all the above ideas are implemented in India for the LCCs, then and only then could they be really called low cost carriers. Only then should the full service carriers compare themselves to these operators. Till then there is a long way to go.

2 comments:

  1. having traveled in ryan air... there is a lot more that this airline do to cut cost... will try to write a detailed post on that

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  2. i liked your blogs. look at ryanair, it is one thr true model of lcc. i am flying many routes for just 1 cent
    i can do a whole project the way they work

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