Low cost carriers flying high

Discerning air travellers may dislike the services offered by low cost carriers (LCCs), but they are the ones flying high in Nepali skies. According to Tribhuvan International Airport (TIA), LCCs accounted for 24 percent of all the passengers carried by international airlines through Nepal in 2011. The figure represents a 9 percent growth year on year.

LCCs achieved this remarkable level of performance in less than three years. Three of them—Air Arabia, Spice Jet and Fly Dubai—were among the top 10 airlines in 2011. The speed at which LCCs have been enlarging their market is exemplified by new entrant SpiceJet, which climbed to number five in terms of passenger movement in the space of a year.

According to TIA’s stats for 2011, the market share of legacy carriers has been shrinking while that of LCCs, except Jet Lite, has increased. Though Qatar Airways still occupies the top slot, it registered a negative growth of 7.45 percent in 2011. Ditto the national flag carrier Nepal Airlines Corporation whose passenger movement plunged 13.12 percent. Thai Airways, Air India and Gulf Air posted negative growth of 12.17 percent, 12.89 percent and 16.39 percent respectively.

In contrast, almost all the LCCs showed strong growth in 2011. Fly Dubai’s passenger occupancy jumped 86.96 percent while Air Arabia registered a rise of 19.79 percent.

LCCs entered the Nepali skies six years ago. Air Arabia was the first and the latest entrant in the list is UAE-based RAK Airways.

Six LCCs—Air Arabia, Spice Jet, Jet Lite, Fly Dubai, Indigo and RAK Airways—currently serve Nepal. And they have made air travel increasingly affordable to average middle class Nepalis.

Bhola Bikram Thapa, managing director of President Travel and Tours, said growing price consciousness among travellers around the world has led to LCCs securing a sizeable share of the aviation market. The LCCs, according to Thapa, have given travellers a choice. “With more LCCs making their way into the Nepali skies, people now have options to travel at cheap airfares,” Thapa added.

Aggressive marketing by LCCs has forced legacy carriers to slash their airfares. “With more and more travellers preferring them, LCCs are posing a serious challenge to legacy carriers and have even compelled them to compete in terms of ticket prices,” said Shyam Raj Thapaliya, managing director of Osho World Travel Nepal.

A ticket to the Gulf countries on legacy carriers costs Rs 22,000 during the tourist season. And during the off season, they slash the fares to Rs 14,000 to Rs 16,000, which is close to what LCCs charge.

Thapa said that legacy carriers had been turning to narrow-body aircraft to reduce operating costs following the example of LCCs.

source: The Kathmandu Post,2 March 2012