Incumbent airlines in India are reworking their finances and business strategies to stay fit to deal with intense competition expected from new airlines.
Though AirAsia India has commenced operations two months back, it is yet to unleash its full potential. Another new airline, Vistara, a joint venture of Tatas and Singapore Airlines, is expected to be airborne in October. Besides, six new airlines are waiting for clearances to enter business.
Considering this, incumbent airlines are cleaning up their balance-sheets and acquiring financial muscle apart from controlling costs to deal with the situation.
Bolstered by financial backing from Etihad Airways, Naresh Goyal, Chairman of Jet Airways, is talking tough to bounce back and effectively deal with competition. Jet has decided to solely concentrate on full service category to focus on profitable growth with an emphasis on debt reduction. Etihad has committed to help Jet to retain its lost glory. SpiceJet is in the process of mobilising fresh funding from its promoters. The airline’s board has increased the company’s authorised share capital to Rs.1,500 crore from Rs.1,000 crore to enable it to raise more money. The airline is willing to take foreign investors on board to improve its finances.
IndiGo recently bagged government’s approval to recast its shareholding pattern to raise fresh funds. It is also planning an initial public offering. Go Air, while looking for a foreign airline partner, is planning to start international operations next year. The Central Government is already bailing out Air India whose losses have reduced and its induction into Star Alliance is likely to help. According to experts, Indian carriers were required to mobilise about Rs.9,600 crore this year to sustain operations.
“We are looking into every cost, from fuel consumption to aircraft to maintenance, staffing productivity, procurement rates and volume, aircraft rotations and crew layover patterns and hotel usage, cost of boarding passes, bag tags, and uniforms, and all overheads, and indentifying ways to optimise. Ancillary revenue is being pursued through all possible means, from cargo to advertising, to enhance the menu to have more on-board sales and launch of new products,” said SpiceJet spokesperson.
To ensure that their servers do not crash during flash sales offers, airlines are seen adopting cloud computing. “Cloud computing allows auto scaling and helps in improving service response,” said Suresh Venkatachari, Chairman & CEO, 8KMile which had helped Air Asia to handle two million users per second on its website through cloud computing.
