Air India Express’ ancillary revenues now account for 14-15 percent. The company expects it to reach 20 per cent soon, according to sources. The ancillary revenue is going to be the airline’s focus for the next fiscal.
According to sources, over the past year, the airline has made multiple strides in adding more touch points to boost ancillary revenues. One of the two people businessline spoke with said that post today the company has at least 20 touch points through which it is able to get additional revenues.
“The are mainly divided in four sections; food, baggage, inflight services and travel services. For example, for food, we have our brand Gourmair under which we keep updating our menu. Under inflight services, we have additional seats, inflight entertainment etc. We have services like cabin carry on luggage which allows you to carry your check in bag in the cabin, or fees for special equipment, we also have services which allows you to pre book your extra baggage. In all, we have a total of 20 such products and services through which we charge a premium besides the seats,” the first person added.
Air India Express, was owned by the government until the Tata Group placed a bid to buyout both Air India and Air India Express in 2022. The Tata group then decided to merge AirAsia India with Air India Express. Four months ago, the airline revamped its entire offering along with a new livery and cabin services among others.
The second person said that “Over the past year or so, we have been able to generate 14-15 per cent of our revenues through ancillary revenues. We see a potential of increasing this to 20 per cent in the near future.”
When businessline asked Aloke Singh, CEO, Air India Express at the Wings India event held earlier this month, if it was a doable number to achieve, Singh said, “It is an ambitious number but fairly doable. He further added that “Ancillary revenue will be a strong focus area for us in the coming fiscal. It has a great potential, and our teams are working on newer product and services to boost the non-passenger revenue.”
According to industry experts, ancillary revenues is seldom focused on. According to a CAPA India report, over the past ten years to FY20, traffic has grown at a CAGR of 13.2 per cent, but non-passenger revenue has grown at only 4.1 per cent.
However, at Ryanair, non-passenger revenue grew at around 1.5x traffic from FY2014 to FY2020, despite being in a mature market. “Ancillaries have simply not been a focus. Even hand baggage only fares are not being marketed with intensity,” the report stated.
Though cargo may gained attention only through compulsion, it is now recognised for the contribution it can make, noted CAPA India. “A similar focus should be given to ancillaries. Airlines in India are focusing only on fares. Without a strategic focus on ancillaries, structural profitability is not feasible. Rather than a one-size-fits-all proposition, ancillaries can drive increased customisation for the passenger, while delivering higher revenue,” it added.
