Airlines battle to corner global corporate traffic

Such high-yielding deals are crucial to ensuring profitability

MUMBAI: With Kingfisher Airlines joining Jet Airways and Air India on international routes, the fight for high-yielding international corporate traffic has taken off.

Attracting business traffic is important because, on long-haul international routes, corporate traffic — much of which flies on the high-yield business class seats — is key to ensuring profitability.

Sudheer Raghavan, chief operating officer, Jet Airways, said one of the segments the airline looked at when it went international was the Indian diaspora. “Now that we have established ourselves with that segment, our focus is on signing up corporates. We have about 2500 corporate deals across the world with various companies. Most of these companies also have a presence in India,” he added.

According to Jet executives, nearly 450 of these deals are with business houses based outside India.

Hitesh Patel, executive vice-president, Kingfisher Airlines, said the airline will target international corporates. “We have extensive corporate partnerships in India. We having just launched our international product… we are working on such deals, especially in the United Kingdom.” Sources indicate the airline is talking to various IT players, especially for its Bangalore-San Francisco route.

Air India, the nation’s flag carrier, refused to divulge details of its corporate deals outside India. Jitender Bhargava, executive director, said, “We don’t compile a list of individual deals. But we work on such deals from all our international offices. From India, we have a huge contract with TCS, which is our biggest corporate deal.”

Marketing departments of airlines offer heavy discounts and other perks to attract corporates. The discounts could often be as large as 30-50%. Sweeteners like free upgrades and flexibility in travel plans are also thrown in. Add airport transfers and baggage allowances, and such deals present a tempting offer for corporates.

Mark Martin, senior advisor-aviation, KPMG, said it is a sound strategy to go for corporate deals. “It means you are assured of traffic, even if you have to keep your margins slightly thin by offering discounts. The game is one of retention,” he explained.
Such a strategy also means Indian carriers have to woo frequent fliers of other airlines.

This is often difficult because most travelers have long-term relationships with airlines.
But airlines are looking for ways around the problem. Says Raghavan, “In Shanghai we are members of Asia Miles - the main proponent of which is Cathay Pacific. A Chinese gentleman can fly on Jet Airways and still earn Air Miles. So we are leveling the playing field.” Jet is also part of the Lufthansa-led Miles and More, a similar multi-airline frequent flyer program.

But are these enough to compete with entrenched players who have long standing relationships with international carriers?

An analyst said, “What is to the advantage of Indian carriers is that they have a reputation for warmth and service. Ultimately, you need to have a very good product to attract business traffic. Indian carriers are starting to build that reputation.”

n_john@dnaindia.net