Air India aims to boost load factor by increasing economy class seats

Written by fe Bureau | New Delhi | Updated: Feb 29 2012, 06:35am hrs
National carrier Air India has decided to bet big on economy class seats. The carrier, which has been offering seats at fares lower than those offered by private airlines on various routes, is going to reconfigure its Airbus fleet, increasing the total number of economy class seats.

The airline board, which met on Monday evening, has already approved the proposal in this regard. According to industry experts, the move makes more business sense for the carrier as it struggles hard to push up its passenger load factor.

The government-owned carrier holds 17.1% of the domestic market, against Jet Airways 20.9% and IndiGos 20.8%. The airlines seat factor had been a little over 70%, whereas its private counterparts have seen a seat factor of as high as 90%.

The airline has 34 Airbus aircraft, A320s and A321s, and each have around 20 business class seats. This number is likely to be cut to around 12. According to industry experts, the move will enhance revenue for the airline. Growth in the economy class traffic is far more than that in the business class. There are people shifting from railways to air travel, all of it goes to economy class bookings, said Sabina Chopra, co-founder of online travel portal Yatra.com.

Growth in economy class travel has also put the low-cost carriers (LCCs) like SpiceJet and IndiGo ahead of the competition. The success of the LCCs has proved the advantages of the full economy configuration in the highly price-sensitive Indian market. It may, therefore, be prudent on the part of full-service carriers to alter the seat configuration on certain routes and time slots that have or are likely to see low seat factors in the business class, said Amber Dubey, director (aviation) at global consultancy firm KPMG.

Air India is in the process of restructuring its debt and operations in an anticipation of a turnaround. The government plans to offer it a bailout of around R10,000 crore, which includes R6,600 crore equity.