Air India is introducing a fare class that does not include complimentary meals, as the full-service carrier looks to cut costs and compete with budget rivals in an increasingly challenging environment.
The so-called basic fare is available for travel in economy class on some domestic routes, the airline said late on June 16. It includes a 15kg checked baggage allowance and 7kg cabin baggage, as well as free beverages such as tea and coffee.
These fares can be booked only on Air India’s website, mobile app, call centre and airport ticketing offices.
The country’s second-largest airline is looking for ways to increase revenue and return to profitability after incurring a record loss of more than 220 billion rupees (S$2.98 billion) in its last fiscal year that ended in March.
Its majority owner, the Tata Group, has told Air India to stabilise its operations and reduce the red ink, forcing the carrier to pivot away from an ambitious growth plan. Air India is now looking to downsize and slow down deliveries of hundreds of planes it ordered from Airbus SE and Boeing, people familiar with the matter said last week.
Unbundling some services from fares on its full-service airline could help attract more customers, and would enable Air India to save on fees paid to travel agencies and other online portals. But the airline also risks cannibalising business from its own low-cost carrier, Air India Express.
Air India’s basic fare mirrors offerings from rivals IndiGo, owned by InterGlobe Aviation, and fast-growing local airline Akasa Air. Air India had a 24.7 per cent share of the country’s domestic market in April, versus IndiGo’s 65 per cent share, according to data from India’s civil aviation authority.
Air India offers other economy fares that include value, classic and flex options that all come with free meals. Travellers opting for basic fares can pre-purchase meals up to 24 hours before departure. It added it will assess customer feedback and responses during the pilot phase “to guide decisions on the future of the offering”.
India’s airlines have been struggling of late with mounting costs due to the Middle East conflict, prompting the government to provide 100 billion rupees (S$1.36 billion) to support oil retailers in capping jet fuel prices. BLOOMBERG
