What full-service carriers and low-cost airlines are offering to woo & retain frequent flyers

By Devesh Agarwal

Frequent business travellers are an airline’s delight. They pay up to 300% more than the lowest fares offered for advance purchases and over 10 times the average fare for business class seats. In other words, they are the backbone of an industry that struggles to make money.

Most passengers would want nothing more than airlines to be on time and offer a hassle-free, clean service. The expectations of frequent travellers are markedly higher. Even on flights of two hours or more, they wouldn’t mind paying a premium for extra legroom, the comfort of an airport lounge, accumulation of air miles and tasty food. A decent in-flight entertainment is a must.

Due to the absence of low-cost aviation infrastructure in India, the traditional boundaries between full-service carriers and low-cost airlines have blurred. Lowcost, or budget, carriers have been offering improved services for better yields and full-service carriers have been reducing add-on services along with fares to retain market share.

Plenty of Options

For frequent business travellers, this is a mixed bag. Improved services by lowcost airlines? Great. Reduced services by full-service carriers? Not-so great. But recent developments in Indian aviation signal these passengers might be in for good times.

Look at budget carriers. They have in recent times introduced a series of products aimed at the high-paying passenger. Spice-Jet is leading the charge with SpiceMax, which offers extra legroom of six inches in the first five rows of their Boeing 737 jets and the first row of their Q400 turboprops, along with priority ground handling for only Rs 500 a passenger.

Another package called SpiceFlex offers priority checkin, seat selection (excluding SpiceMax), a hot meal, priority ground handling, and waiver of flight change fees. Rival GoAir’s GoBusiness package seats passengers in the first two rows, leaves the middle seat vacant, offers 35-kg check-in baggage allowance, hot meals, allows additional baggage and waives off change fees for a premium of about Rs 2,500. AirAsia offers Premium Flex, which includes change fee waivers, 20 kg of baggage, Xpress boarding and Xpress baggage.

IndiGo does not offer a significant add-on service, except FastForward for Rs 200, which is a ‘priority checkin’ — boarding passes are handed quicker. All the budget airlines allow passengers to select seats for a fee, though only AirAsia offers priority boarding.

As for full-service carriers, Jet Airways recently ended years of brand confusion by deciding to shelve its JetLite and JetKonnect low-cost brands. Jet will now focus only on its full-service brand.

This is a sensible move. Had it continued with these under-performing assets, Jet would have been squeezed between the ultra-low-cost AirAsia India and Vistara, a full-service airline by the Tata-Singapore Airlines combine that is due to launch in October, suffocating under the two extreme ends of the value spectrum. Jet once offered a decent frequent flyer programme — complemented by a pleasing in-flight service, food and upgrades — to customers piqued by Air India’s unreliability.

But the goodwill was eroded during the past five years as Jet sought to compete in the budget segment. Expect those benefits to return now. The airline has already liberalized its frequent flyer programme and has improved linkages with co-branded credit cards. Jet is likely to further leverage its partnership with Gulf carrier Etihad to raise the game.

New Maharaja?

What about Air India? Mollycoddled under the title of national carrier, the airline is a full-service carrier with budget carrier fares, the losses being covered by a Rs 30,000-crore government bailout. Despite being the only carrier to offer in-flight entertainment on domestic flights and a decent frequent flyer programme, poor service and dreadful punctuality along with pathetic ground handling have kept corporate travellers away.

With the carrier joining the airline club Star Alliance, the value proposition of Air India changes. Frequent flyers now earn miles globally while service has improved. On-time performance remains a concern, but business travellers will be pleased with the aviation minister’s directive to the carrier to offer business and first class seats at a 50% discount.

That leaves us with Vistara. The carrier has been tight-lipped on its proposed services, except a promise to “deliver a seamless experience via personalisation of services” and intuitive services which will “bring back the joy of flying”. Thanks to the expertise of Singapore Airlines, Vistara is likely to target frequent flyers from the CXO level downwards. Passengers can expect a great business class at affordable prices, a premium economy class with extra legroom and upgraded meal service for a premium, and a full-service economy class.

As a former frequent flyer of Singapore Airlines, I have experienced the seamless “personalized intuitive service” Vistara has promised. The airline catered to my travel tastes — whether it was seating, meals or drinks. I was welcomed by name, led to my favourite seat, and nay a reminder, my favourite drink would arrive, as would my favourite dish, all of which were automatically assigned at booking.

The big question for Vistara and rivals looking to up the ante is this. Is the Indian passenger willing to pay a premium for this kind of service? Surveys suggest that due to the shorter duration, frequent flyers are willing to pay a premium of not more than 10% compared with budget airlines. Airlines, particularly Vistara, have to figure out how to solve this pricing and service dilemma. Else, they could face what new entrant AirAsia India is encountering — over 30% of seats going empty.


The writer runs BangaloreAviation.com, a website devoted to news and analyses of the aviation industry