Air India Considering the Introduction of the Premium Economy Cabin
Air India, a government-owned and operated airline company of India and is managed by Air India Limited (AIL). It is the flag carrier commercial airline of India and is ranked as the third-largest among all Indian airline companies(lead by Indigo & Jet Airways) in regards to the market share, it caters to its customers through its fleet of Boeing and Airbus aircraft and flies to numerous national and international airports. The company’s’ headquarter; Indian Airlines House is located in New Delhi.
Indira Gandhi International Airport & Chhatrapati Shivaji International Airport are the two major and prime domestic hubs followed by airports of Kolkata and Madras, namely, Netaji Subhas Chandra Bose International Airport and Chennai International Airport as the secondary hubs. The airline also managed and operated a hub at the Frankfurt Airport but was shut down due to high operational costs. Meanwhile, the airline is planning for another international hub which will be managed from Dubai International Airport.
In another move to provide better service to its existing flyers and also to woo new flyers Air India is planning to introduce in its flights – premium economy cabins in addition to existing offers of business and economy class cabins. With this move, the airline plans to foray into the segment which is growing day by day in demand and take full advantage to expand the company’s profits.
In the present domestic aviation scenario, only Vistara Airline is catering to the customers of this segment. Vistara is another India based private airline company managed by Tata Sons and Singapore Airlines in a joint venture. The headquarters of the airline is located in Gurgaon and its operating hub is Indira Gandhi International Airport.
The company started its operations on January 9, 2015, and runs 253 scheduled flights weekly, and covers 10 national destinations with its fleet of 6 Airbus aircraft. In the domestic operators, Vistara was the first airline to bring in the concept of a premium economy cabin.
The official further added that due to the shifts in the preferences of the passengers the companies have been obliged to probe and come around with varied options for traveling so that they can retain and lure customers effectively, and regarding the decision, he said: “it may take a while before a final decision on the issue is arrived at”.
“We also have to evaluate the routes, domestic or international, before we firm up our plans”, the official also added.
The Concept of the premium economy was initially introduced by Eva Air, a Taiwanese carrier in the year 1991, and this class was introduced with its separate service structure and a different fare slab. And soon the concept was adopted by different airlines starting a sort of chain reaction in the aviation industry worldwide.
The premium economy further cemented its position and justified the inclusion of the concept as it assumed the role of damage controller of airline’s revenue in difficult times of recession and market uncertainties as usually, these phases affected the revenues of the business class services.
As far as the price structuring of premium economy class is concerned it generally hovers around 60 percent less than a business class ticket and almost near 60 percent costlier than the economy class ticket. In the last fiscal year, Air India earned revenue of Rs 15,000 crore from its total ticket sales, and as per the officials, “we are aiming at enhancing it to a significantly higher level along with higher yield with new revenue streams and introduction of a new cabin class could be one of the options”.