Tata Group’s Air India plans to grow its ancillary revenue stream by around 50% in the current fiscal.
The airline recently optimised the pricing of its ancillary products such as excess baggage and seat selection as well as introduced new value-added products.
According to sources, Air India is working to further strengthen its portfolio of ancillary offerings by introducing more passenger-friendly product solutions to “meet most travel needs integrated into its direct booking channels”.
“Since Air India’s privatisation, the airline has followed a two-pronged approach to grow its ancillary business,” a source told FE, adding: “Firstly, they have improved on the ancillary products they had on offer and rationalised the pricing of those to correct what they were charging for seat selection, excess baggage, and others.”
As per sources, the success of services such as Upgrade Plus, travel insurance, a fare lock option, and the repricing of other products to industry standards led Air India to grow its ancillary revenue by over 40% on a year-on-year basis to Rs 1,700 crore in FY24.
During the last two years, under Tata’s leadership, the airline has managed to grow its ancillary revenue stream by a whopping 142%.
In FY22, the airline earned Rs 700 crore, which increased to Rs 1,300 crore in FY23.
The airline now targets a revenue collection of around Rs 2,500 crore from the ancillary stream in FY25. It also plans to grow its ancillary revenue by threefold from the target of FY25 in FY27 – the fiscal that the airline aims to become profitable.
Queries sent to Air India did not elicit a response till the time of going to the press.
As per sources, the new management has launched fresh products such as Upgrade Plus to invite eligible bookings for confirmed upgrades, gift cards, travel insurance, and Fare Lock, among others.
Besides, sources said Air India has launched a visa concierge service in partnership with VFS Global subsidiary OneVasco to offer its customers the option to apply for visas to over 100 countries as well as e-visas to India for foreign nationalities.
The airline has already rolled out value-added services like Book-A-Cab for passengers travelling to and from domestic airports, and is in talks with major companies for the B2B sales of its gift cards.
In addition, sources said, the airline is set to collaborate with different brands to optimise passenger convenience and be a one-stop shop for most travel requirements.
Ancillary products have emerged as a major source of revenue for airlines, which complements the traditional streams earned via ticket sales. Globally, airlines are now curating and offering tailor-made travel experiences with a slew of on-board and on-ground services such as holiday packages, hotel bookings, car rentals, and insurance plans bought during the process of ticket purchase.