More wealthy Indians are buying business class seats on international flights, primarily as corporates expand their business interests globally and spend on premium air travel for their senior management.
A year-on-year comparison done for every month since January by some travel firms for ET revealed bookings in the segment jumped by up to 75 per cent.
The growth in popularity in the front end of the cabin is testimony to India’s economic growth — the fastest among major economies — and increased corporate activity that has directly led to a spurt in corporate travel.
“The number of people who travel business class has gone up and this is a reflection of business confidence in the corporate sector,” said John Nair, head of business travel at Cox & Kings.
“As a result, companies are more flexible and have permitted more senior management to travel business class.
Second, in the past couple of years, the capacity from India has not gone up but the number of people who travel in the premium cabin has and, therefore, there is a supply-demand mismatch,” he added.
Nair of Cox & Kings said the mid- and long-haul sectors with travel times of five to nine hours are the most popular for business class travel.
India has an annual international air passenger traffic of about 55 million. About 60 domestic and foreign airlines ferry international flyers in and out of the country. Of India’s seven major local carriers, four fly international and only Jet Airways and Air India sell business class seats. Out of all international carriers operating in India, Jet has increased capacity at the fastest clip on overseas routes.
Industry data showed that Indian passengers are opting more for foreign carriers that have a wider global air network than their Indian counterparts.
Data compiled by MakeMyTrip, India’s biggest online travel portal, showed business class bookings on foreign carriers grew by 37 per cent to 88 per cent year-on-year every month from January to August. For example, bookings in August 2016 grew by 88 per cent over August 2015. For Indian carriers, they declined every month except in March and June.
The portal compiled data on the basis of an average of spot and prior bookings. Manoj Samuel, executive director of Riya Travels, one of India’s biggest offline travel portals, said there has been an increase in bookings on carriers such as UAE’s Emirates and Etihad Airways, UK’s flag carrier British Airways and German airline Lufthansa, among others.
Foreign carriers gain
Data also showed that while foreign carriers have been enticing fliers by cutting fares on business class by up to 24 per cent, their Indian counterparts have increased fares by between 19 per cent and 59 per cent, something that may have led to a decline in demand for the latter.
Indian carriers have also been facing slower growth rates on the business class segment in domestic flights, as corporates decide not to spend on premium fares on short distance air travel. Local flights in India take less than three hours. Jet Airways, Air India and Vistara sell business class seats on the domestic sector.
That segment for carriers grew in the first three months of the year but fell in the subsequent months, data showed.
“Actually, demand for sub-four hour flights is falling as people don’t see enough value. The growth is in longer flights,” said Manoj Chacko, chief executive officer at SOTC Business Travel. Fred VanVleet JerseyShare This