Low-cost
commercial carrier IndiGo and Naresh Goyal-run Jet Airways have launched a novel sales strategy of allowing customers to buy air tickets through credit cards with payments stretched out over equated monthly instalments (EMIs) of two months.
With jet fuel prices shooting through the roof and fierce competition in the aviation market, the two airlines have taken a leaf out of the book of mobile phone companies, which have tied-up with banks to offer
handsets on EMIs through credit card purchases.
Both IndiGo and Jet Airways have tied-up with HDFC, Citibank and ICICI Bank to offer their passengers an option to pay fares in two instalments.
The two carriers, which between them command as much as 51 per cent of India's aviation market, have been giving a tough time to rival airlines such as Air India.
Sources said other airlines too had tried to tie-up with the credit card companies (the banks) but the deal could not work out as the latter found the business unviable. The flip-side of the EMI option through credit cards payments is that it carries a hefty amount of 14 per cent additional service tax charged on tickets by banks besides one per cent charged as processing fee by the two carriers.
The passengers get a two-month period to pay the instalments but have to cough up 15 per cent more on the ticket. "We wanted the banks to offer interest-free EMIs the same way they offered in the case of mobile phone handsets, but the banks did not accept our deal," said an industry official.
Airline sources said they would prefer banks to offer service tax-free EMIs for air travel bookings. "We are trying to offer more sops to air travellers from next month when the monsoon season will set in. We witness a massive drop in our business in the monsoon," said an airline official.
"You can see how mobile manu-facturers have been doing good business since late last year after they tied-up with various banks to offer interest-free EMIs. Their sales have shot up over the period and the same can happen in the aviation sector which is still in the red," the official said.
IndiGo and Jet Airways have been competing with one another for the number one slot. IndiGo is maintaining the top position since last one year.
In March this year, IndiGo was the most popular domestic airline with a 27.4 per cent market share, while Jet Airways and Jetlite com-bine had a share of 23.8 per cent and SpiceJet, 20.4 per cent. National carrier Air India during the same period had a market share of 20.2 per cent while GoAir had 8.1 per cent.
Interestingly, IndiGo filled 79 per cent of its seats during March 2013, while the load factor for Jet Airways was the lowest in the industry at 71.3 per cent, meaning that a third of its total capacity was empty. Jet Airways had announced a huge sale of 20 lakh seats at Rs 2,250 per ticket for travel up to anytime till December 31 this year in Feb-ruary in a desperate bid to increase its load factor. Jet was forced to follow SpiceJet, which had announced a cheap ticket bonanza a month earlier.
Correction: An earlier version of the story said Indigo and Jet Airways together control 61 per cent of the Indian air passenger market.Courtesy: Mail Today
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