On the eve of the inauguration of the new Delhi-Kanpur-Kolkata route, Air India (AI) announced its focus on exploring newer regional routes to cash in on the opportunity where no major competition is present. The ailing Maharaja which is heavily laden by a huge debt and a string of losses is betting smaller cities in the Tier II and III regions to improve its market share and revenues.
The opportunities as the company believes arises out of the fact that a majority of these cities require connectivity with major metros and that there are not many takers to provide services on these unconventional routes as of now.
One of the company’s senior officials said that they expect occupancy of 85% on flights like the Delhi-Kanpur-Kolkata routes. “This sector is such that there will be a scarcity of seats rather than scarcity of demand” he added. Services on such routes will be catered by the much smaller passenger aircrafts like the CRJ (Canadian Regional Jets) and the ATR turbo props having a capacity of seating 70. The airline offers a lower fare of Rs 4000 which otherwise sells for Rs 6000. Due to lower fares there are reasonably lesser chances of an escalation in prices as a belief among the management.
The use of smaller aircrafts gives a fair chance to the company to cut down on operating expenses. This is due to the fact that services on these routes attract government subsidies. Also the landing costs are low which will call for optimizing the cost-benefit equation. The Kanpur flight is set to be inaugurated by Minister of State for Aviation Mr. Vaylar Ravi.
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About Hitesh Bhasin
