Airlines waltz with retailers for revenue boost

Written by Mona Mehta | Shaheen Mansuri | Mumbai, Jun 3 | Updated: Jun 5 2008, 05:15am hrs
To cash in on the retail boom in the country, airline majors have started tying up with retail giants to boost their revenues. Low cost carrier GoAir has tied up with apparel retailer Provogue. As part of the strategy, all Provogue customers will be entitled to a free GoAir Provogue smart travel voucher each on every Provogue purchase of over Rs 5,000 made up to July 31, 2008. These special vouchers can be redeemed across the GoAir network. The special GoAir-Provogue voucher can be redeemed for travel between May 25 to October 15, 2008. Edgardo Badiali, chief executive officer, GoAir said, "Our unique association with the Provogue brand will ensure that travel experience is shared with Provogue customers too."

Delhi-based carrier SpiceJet, which has seen spiraling fuel costs affecting the profitability of the airline in its third quarter, has a joint venture with an e-portal to sell merchandise. Simplify Deccan, in which Kingfisher acquired stakes last year, has also tied up with the company called 'Our Merchandising' for on-board promotions. Says Nalin Gagrani, marketing head, Simplify Deccan," Our merchandising accumulates all the brands for us for sales onboard." Deccan passengers are given bidding forms on-board. The product line ranges from watches and shoes to accessories. The highest bidder can buy the product during travel.

"In a scenario where jet fuel prices are climbing to uncertain heights, airline majors are resorting to innovative options of generating ancillary revenues. By entering into alliances by retail majors, the airlines aim to mitigate the impact of record high jet fuel prices," said an industry analyst. Tata's Trent Ltd too is talking to airline majors in order to enter into cross-promotional tie-ups. According to company sources, "The details are being worked out and we will soon finalise with one airline major." DLF Retail too would look at retail tie-ups with an aviation major.

International property consultants say that retail majors are moving in the right direction by tying up with aviation majors for promotions, as together they would add a 15% to 20% boost in sales.