Business-class fares on key civil aviation routes have risen considerably after travel agents approved by the International Air Transport Association (IATA) stopped booking of tickets in cash-strapped Kingfisher Airlines.
The Travel Agents Federation of India (Tafi) saw a correlation between the two, and attributed the development to a decrease in the supply of business-class seats. “As of now, the system has enough economy-class seats,” said Tafi president Ajay Prakash. “But things will get worse when the demand increases going ahead during the peak season.”
India has around 3,000 IATA-approved travel agents, and all the country’s leading travel portals are a member.
fares*
fares*
Air India or Jet Airways—the other two airlines
(apart from Kingfisher) that offer Business Class seats
*One-way fares
All figures in Rs
Source: Travel portals
It is for the second time in four weeks that IATA suspended Kingfisher from its collection house, besides the billing and settlement plan, called BSP. The BSP is a system designed to facilitate and simplify the selling, reporting and remitting procedures of IATA-accredited passenger sales agents, as well as improve financial control and cash flow for BSP airlines. At the close of 2011, there were 82 BSPs, covering 173 countries and territories serving about 400 airlines, while the gross sales processed amounted to $249 billion.
On its part, Kingfisher has made alternative ticket-booking arrangement. The customers, a release from the airlines said, “can continue to book their travel on Kingfisher, via select leading travel agents and their network of partners and our website”.
Even so, Kingfisher tickets going out of the system has left “several crores or rupees at stake”, according to a leading travel portal. “We recently bought tickets worth several crores from Kingfisher, which had sold them at a discount of around 50 per cent to raise cash,” disclosed one of its top executives. “Now, we cannot sell tickets; thus, that investment is at stake. We are trying to get that money back from the airline.”
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Another executive with a full-service carrier sees Kingfisher’s recent cutdown on flights as a blessing in disguise. “Business-class seats gives more yields for any legacy carrier. With Kingfisher going out of the system, we will be able to get more yields from the front side of the plane thus contributing to our bottomline. It seems Indian market has the appetite to sustain only two full-service carriers,” he added.
Kingfisher Airlines recorded a loss of Rs 1,175 crore for the first three quarters of this financial year, has already accumulated losses of around Rs 6,000 crore.