Air India last reported loss stood at Rs 5,765 crore for the year ended March 2017. The government has infused closed to Rs 2,000 crore into the airline so far this fiscal.
To ensure transparency in its upgrade policy, Air India has devised a new mechanism. Under the scheme, if economy class passengers wish to upgrade to business class, they need to offer a bid to fly as business category passengers. The national carrier has decided to auction business class seats under the ‘preferred seat option’ on its website. Under this option, economy class seats can now be upgraded to the business class without a minimum payout.
The full-service carrier rolled out the model this week on domestic and international flights originating from Delhi.
For instance, a passenger who has booked an economy seat between Delhi and Mumbai can offer any sum to access business class facilities provided. He/she would be upgraded if it turns out to be the highest bid. After the check-in roster is prepared, the airport manager can allocate vacant business class seats at the time of boarding depending on top bids.
Earlier, the airline used to upgrade seats against a fixed charge ranging between Rs 4,500 and Rs 6,000 for domestic flights and $200-1000 on international flights depending on countries. This system did not yield desired results as premium seats still went unsold.
The measure will help the cash-strapped airline fill vacant business class seats for additional revenue. On an average, 30-40% seats in the business class category of the airline go vacant causing significant loss of revenue.
“This was important as many business class seats were going vacant. We are planning to cover other cities in coming weeks. We hope to garner Rs 1 crore per day when the model is fully rolled out,” Air India chairman and managing director Pradeep Singh Kharola told FE.
Air India held 10.4% of the total international traffic at the end of FY18 while its domestic market share stood at 12%.
Kharola said passengers would be provided food and beverages depending on availability. Experts believe that removing a threshold amount could help the ailing carrier fill vacant seats.
“Air India already had an airport upgrade scheme running. Jet (Airways) too upgrades its passengers for a minimum fee. Removing the threshold could help Air India garner more revenues,” Balu Ramachandran, head of air and distribution, Cleartrip, said.
Air India last reported loss stood at `5,765 crore for the year ended March 2017. The government has infused closed to `2,000 crore into the airline so far this fiscal.