Airblue has lessons for local airlines

[smarties]

MUMBAI: It’s a company which calls itself a low-cost carrier (LCC) and yet offers piping hot meals on at all its flights, has dual class seating arrangements, and surprise! surprise! made operational profit in the first two months of its operations.

And it doesn’t stop there. The company has zero debt on its books and plans to meet the requirements of initial fleet expansion funds through internal accruals.

Meet Shahid K Abassi, chief operating officer of Airblue, Pakistan’s low-cost airline. In three years, it has carved a third of the marketshare in the sectors it operates domestically. In absolute terms, Pakistan International Airlines (PIA), the legacy carrier, today ferries more passengers than it had done three years back when Airblue took to skies, indicating that the latter has expanded the market.

Airblue has a fleet of six aircraft and it connects seven cities in Pakistan. PIA has 32 planes and it largely concentrates on the long-haul sector.

“Inspite of being an LCC, we provide food, since the legacy carriers have been doing it for 50 years and people associate air travel with hot meals. We realised that you need a happy customer, not just a price-conscious one,” Abassi, who has earlier worked with PIA, said. Pakistan’s domestic civil aviation market is under 5 million.

Like most LCCs, Airblue puts its entire ticket inventory on the Net and direct internet booking accounts for 15% of its sales.

What is not surprising is that it begins selling tickets at a 40% discount to full service carriers (FSCs), but what is surprising is that the closer to the date of your travel, you may end up paying up to 30% premium over the price charged by FSCs .

“Although we begin selling our tickets about 40% cheaper to what a legacy carrier charges, due to dynamic fare structure, the final fare may be 30% more than what a full service carrier charges,” Abassi said. This is only for the economy class; the carrier doesn’t discount business class seats.

In Pakistan, a carrier is allowed to fly overseas after a year of domestic operations, against India’s five. Airblue, which currently operates flights to Dubai, has plans to fly to the UK. Abassi says it plans to fund its future aircraft acquisition- up to six- through internal cash generation.

The company has signed for two A320s and may convert four options and buy two more A350s. Due to lack of aircraft, is it unable to fly to the UK, although it has permissions for eight flights a week. Hence, it is currently scouting to lease two aircraft to begin services by next summer. Abbasi, an ex-parliamentarian, says he has applied to fly to India. “I can connect Mumbai-Karachi today if I get the permission. I have planes sitting idle at night in Karachi. If the visa issue gets sorted out, there is scope for 20 flights a day between India and Pakistan,” he says.

For him to be eligible to fly to India, his airline has to get designated, a status which only PIA enjoys currently. Under the civil aviation agreement between the two countries, there are slots for 12 flights a week between India and Pakistan, which is utilised entirely by PIA now.


http://www.dnaindia.com/report.asp?NewsID=1061350

[FULLTHRUST]

Those lessons were being learnt at PIA

[B777240ER]

The company has signed for two A320s and may convert four options and buy two more A350s

I dont get it. Isnt it meant to be 2 A332's? But the A350 sounds like a great idea.

ED should push CAA into granting it more flights to UK amongst other destinations

[PIA10141]

Would Airblue cross PIA, what do u people think???

[bagold]

Would Airblue cross PIA, what do u people think???

This is not a fair business - ask Richard Branson

[PIA10141]

who is Richard Branson??

[Junaid]

who is Richard Branson??

He owns Virgin Atlantic