Air India is losing about $1 billion, on revenues of $3 billion. What’s more alarming is that Air India contributes 10% of global airline losses with just 0.35% of global traffic. And the Indian national carrier is still struggling with its merger with the domestic Indian Airlines a couple of years back. Couple that with the global economic crises and a bloated payroll, and you know how much trouble the airline is in.

Being an Indian at heart, I couldn’t help but come up with some ideas to save this once well-regarded Maharaja brand. In fact, I know that when Singapore Airlines began operations, they heavily hired the best from Air India! I’m not sure if Air India can return to its former glory anytime soon, but these ideas should certainly help it get back on track. Or at least, I hope so.
Getting the business plan in order
I frankly feel that Air India has only survived as long as it has due to two reasons – offering extremely low fares, and getting government funding. But having fares that hardly cover your costs are not sustainable, especially in the face of tough …

Note: This is a cross-post from Steven Frischling’s Flying with Fish blog. Steven Frischling, aka: Fish, is a self employed photographer, and founder of The Travel Strategist, who has flown approximately 1,000,000 miles since he began to track his mileage 2005.
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Throughout the past year airlines have suffered massive financial losses due to record high fuel prices, a weakening global economy and declining demand for airline seats.

In an attempt to increase their financial stability many airlines in the United States, and around the world, turned to the ancillary revenue generated by charging passengers for their baggage.   As angered as passenger have been regarding the checked baggage fees they have helped major airlines in the United States collect more than US$1,145,385,850 in revenue during 2008…and baggage fees weren’t even initiated by most airlines in the United States until the middle of the second fiscal quarter of 2008.

The fourth fiscal quarter of 2008 saw airlines pull in US$498,600,000 alone!

Checked baggage fees have always provided a significant revenue source for airlines, however prior to the past year this revenue was for excess baggage and overweight baggage. Airlines that do not allow any free-checked baggage, such as American Airlines, now consider all …

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Recently, the Centre for Asia-Pacific Aviation (CAPA) published a report which concluded that the “full-service airline model break down in the new-world order“.

“Worldwide, the number of passengers travelling on First or Business class tickets fell by 16.7% in Jan-2009, a further substantial fall from Dec-2008 levels, which were 13.3% down on the year.â€

That means that legacy airlines, which made a majority of their money from premium passengers, are struggling, even as low-cost carriers see greater traffic from people downgrading and new people taking to the skies.
What does the future full service airline model look like?
Here’s my prediction.
It will consist of airlines charging for providing value added services, rather than those un-bundling their products. Moreover, customer service will become a key brand distinction for the full-service airline, as prices would generally be competitive and so would most of the in-flight products too. The savvy traveler of the future will not only hunt the lowest prices, but be loyal to the airline that treats him well. Lastly and most importantly, employees of the full service airline will be part of the family, and share the love with customers at every touch point too (up to 16 …

Image via Wikipedia

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Jet Airways recently hinted that the worst is over for them and they expect to break even again in the middle of this year. And this is mostly because of the drop in fuel prices (obviously!) as well as the prudence shown by the management in cutting unprofitable routes, including that the San Francisco. And I don’t see this as an isolated case.

After my recent interactions with key airline executives in India, including the CEO at SpiceJet, it is my belief that airlines in India will not only be one of the first few to emerge from the recession, but also come out the strongest. Here are three key reasons for this conviction.
1. Airlines that stand by their customers in bad times win hearts – brand matters
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Just look at what’s happening in the western airlines in this recession. US Airways recently started charging for blankets, and they already charge for water (which can …

Just a few hours ago, Lufthansa raised its forecast for full-year 2008 operating profits from EUR1.1 billion to EUR1.3 billion thanks to a stronger-than-expected fourth quarter. And this comes in at a time when not most major airlines around the world are struggling, but when Lufthansa’s main rivals in Europe, Air France-KLM and British Airways have both issued profit warnings in the past two weeks.

How does Lufthansa defy the trend?
A Lufthansa spokesperson says that lower fuel prices and favorable valuation effects were offsetting a slowdown in traffic demand. But I think there’s more at play here. It’s the formidable Lufthansa brand, that has stood the test of tough times, yet again. A brand that exudes reliability and efficiency

And a strong Lufthansa brand coupled with a vast network in developing markets like India only further helps the cause.

Continuing my series of articles on what makes or breaks airlines operating in India this February, I’d like to share the story of Lufthansa – probably the strongest foreign carrier in India. Below is an article that was recently published in the Indian Express (North America) edition, which comprehensively covers the key …

I flew to from Delhi to Singapore yesterday on Singapore Airlines. Service was at its best, as always, but the Boeing 777 plane wasn’t very full. In fact, the load factor was startingly low – probably below 50%! There was one person in First Class, less than five in Business Class and Economy was empty enough that almost everyone had the middle row seats to sleep across. And it seems to be the case across Singapore Airlines’ flights from India. Why would they be suddenly cutting 214 regional flights?

What’s wrong? Recession… nah, but surely something else is at play here too.
End of the peak season?
Airline officials argued in a recent news report that the drop was due to the end of the peak winter season. “The fall happens every season from January to August,” said an official. But I’d disagree that the slump can be so severe. It’s the end of the peak season, not the beginning of the low season! So, how can passenger numbers drop from 300+ per flight to just over 100?
The unspoken truth: travel agents’ boycott
The drop in traffic in India …

Image via CrunchBase

In December last year, as major retailers in the US worried about “Black Friday” not arriving and cash registers not ringing, Amazon.com announced that it had its best year ever. Here’s the story and here are the numbers: Amazon reported that the buying was strongest on December 15 when they received 6.3 million orders, which according to the Dow Jones translates to a “record 72.9 items a second.†And this is not the first time Amazon has bucked the recessionary trend.
Amazon’s brand matters
The reason for Amazon’s success? It’s the Amazon brand that has done the work here. Had Amazon not established strong brand loyalty in good times, the customers wouldn’t have stood by it in bad times.  More importantly, everything about Amazon is based around customer experience, and everything is marketed to the customer well.

So what can airlines learn from the Amazon brand, to beat the recession? Here are three key lessons.
1. Build a distinct airline brand
If Amazon hadn’t established …

Image by satosphere via Flickr

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In the last part of his three-part interview, Joe Crump,  the VP of Strategic Planning at Razorfish, reveals that instead of fearing the recession, airlines around the world can use it as a catalyst to build strong brands. Joe believes that “incredibly narrow constraints usually present the biggest opportunity for innovation”. I couldn’t agree with him more.

Companies like Apple, GE and Toyota have emerged stronger by just doing that in the past. In fact, the airline industry is full of success stories from the recession as well, like AirAsia and JetBlue. Right now, Virgin America in the US is doing a fabulous job at building a strong brand by offering great value in the recession.
Digital investments = greater ROI
Joe makes a startling revelation in his interview below. He shares that contrary to popular belief, investments in product upgrades on-board an aircraft, as well as other “hard” invesments like frequent flier lounges seldom match the …

Star Alliance, the largest airline alliance is set to grow even bigger. Star Alliance CEO announced that they may double their size in the recent future – to up to 50 members (a quarter of whom might be Lufthansa’s babies :p).

Among its members are some of the world’s largest and most admired airlines, including Singapore, ANA, Lufthansa, and Thai. But of late, a number of airlines with varying (and questionable) reputations have joined the alliance, including Air India, Egyptair and a couple of Chinese carriers. In the future, Star Alliance looks to get more member airlines from Latin America and Africa – further widening the quality spectrum among its carriers. And this may be detrimental for not just the Star Alliance as a whole, but for individual carriers’ reputation as well.
Bigger isn’t always better
The bigger it becomes, the more diluted the brand becomes. Gone will be the days when to fly from Sydney to Stuttgart, you could fly the pampering Singapore Airlines to Frankfurt, and connect to a super-efficient Lufthansa for the last leg of the flight. Just imagine the disparity in the quality of …

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Jet Airways is relying heavily on ethnic marketing in the US to get in touch with its key target market of Non-Resident Indians (NRIs), and tapping on distribution networks like grocery stores to allow access to tickets! In this part 2 of the exclusive interview with Lisa Markovic, the Vice President of Sales and Marketing for Jet Airways in the US, shares with us ways in which Jet Airways is trying to trump the current economic crisis.
Flying through the current economy
Jet Airways has been targeting niche events such as Diwali celebrations and India Day Parade in the US to get targeted exposure with the people who regularly fly to India. Moreover, Lisa realizes that these customers “shop around a lot and do their homework before they make a purchaseâ€, and hence Jet Airways offers a product that offers “great valueâ€.
Alliances and more…
One of the mitigation strategies for the current crisis …