The LCC farce in India

How to start a low cost airline in India?

Take a full service airline, change the name, do away with free food and other freebies, possibly tweak the plane configuration to all-economy – and voila – we are ready!

World over, the Low Cost Carriers ( LCCs) operate on a business model which is different from what a traditional, full-service carrier would have. They operate from secondary airports ( often distant from cities) which have lower costs such as parking charges etc., often fly different routes, and offer bare-basic services to their customers. The aircrafts purchased are often of different configurations, enabling cost savings on procurement as well as maintenance.

In India, most of the airline owners thought that just by doing away passenger amenities, their airlines would become low cost. For e.g, the so called Jet –Konnect uses the same airports, same planes and the same routes as Jet – and becomes a LCC just by a change in name and cutting out passenger facilities. I think very few airlines have realized that they have to operate in a very different manner to realize the low costs. Parameters such as aircraft turn-around and employees to aircraft ratio need to be monitored closely and punctuality helps. ( In my view, Indigo has done a good job on these).

The problems the LCC sector faces are arising out both of the aviation infrastructure, as well as their business model. While airports and ground handling remains in-efficient, the way these airlines are run contribute majorly to their poor operating performance. While MIAL (which manages the Mumbai airport) might have done a good job of changing the tiling and exterirors of the airport and selling retail space, it has not done anything to improve the actual aviation infrastructure , which is what any flyer would / should be most bothered about ( because that determines your actual flying experience – I am at the airport to fly to / from somewhere, not to shop / eat !).

The LCC airlines in India developed without a proper eco-system / infrastructure to sustain them at the low-fare, low cost value proposition. With rising costs, low fares were not possible, thus impacting demand.  It seems that a shake-up / consolidation is the only way this industry would find its right bearings.

My thesis is validated by the statement Kingfisher Airline's CEO made, stating that the operating costs involved were the same as in a full-service carrier and the revenues lesser  - http://www.moneycontrol.com/news/business/operating-costlow-cost-carrier-competitive-kingfisher_594359.html