Air India Express has reported a significant uptick in its ancillary revenue, which currently stands at 14-15 percent of its total revenue. With ambitions for further growth, the airline aims to elevate this figure to 20 percent in the foreseeable future, as indicated by sources familiar with the airline’s operations.
Over the past year, Air India Express has embarked on a concerted effort to expand its ancillary revenue streams by introducing a plethora of touch points designed to enhance passenger experience and increase non-ticket revenue. These touch points, totaling approximately 20, span various categories such as food, baggage, inflight services, and travel-related services. For instance, the airline has introduced branded food options under its Gourmair label and offers additional services like inflight entertainment and pre-booking options for extra baggage. These initiatives underscore the airline’s strategic imperative to diversify its revenue sources beyond traditional ticket sales and mitigate the impact of volatile market conditions.
The evolution of Air India Express into its current form has been marked by notable milestones, particularly following the Tata Group’s bid to acquire both Air India and Air India Express in 2022. Subsequently, the Tata Group made the strategic decision to merge AirAsia India with Air India Express, resulting in a consolidation of resources and operational synergies. The recent revamp of the airline’s offerings, including the introduction of a new livery and enhanced cabin services, further underscores its commitment to delivering exceptional value to passengers while maximizing revenue potential.
According to Aloke Singh, CEO of Air India Express, achieving the 20 percent ancillary revenue target represents an ambitious yet attainable goal. Singh emphasized that ancillary revenue will remain a cornerstone of the airline’s growth strategy in the upcoming fiscal year, with plans underway to introduce new products and services aimed at unlocking additional revenue streams and bolstering the bottom line.
Industry experts have emphasized the pivotal role of ancillary revenue in enhancing airline profitability amidst evolving market dynamics. A report by CAPA India underscores the disparity between passenger traffic growth and non-passenger revenue growth, highlighting the untapped potential within the ancillary revenue segment. While acknowledging the challenges, the report advocates for a strategic reorientation towards ancillary services to drive increased customization for passengers and unlock additional revenue streams.
In conclusion, Air India Express’ proactive approach towards expanding its ancillary revenue base reflects broader industry trends towards revenue diversification and operational optimization. By leveraging innovative service offerings and capitalizing on emerging market opportunities, the airline is well-positioned to navigate the complexities of the aviation landscape and drive sustained growth in the years ahead.
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