Why does the airline industry fail to make enough money?

Well, very simple - they have their pricing all screwed up! Ok, I know I am being harsh and there are probably a bunch of really smart analytics, software and people that goes behind all this and the industry has been working for ages, so please excuse my jarring comment. Honestly, I am sure I have benefitted personally and saved a lot on multiple occasions due to cheap tickets on certain routes. Every once in a while, the location for a trip has been decided based on flight ticket pricing and certainly led to many memories. The one I recall most joyfully was a trip to Nice in France - a beautiful city I must say. Oh! I digress yet again- where were we? Airline pricing- yeah, it's screwed up and I stand by that. My defense is simple- they lose money often enough and every once in a while one or the other close down. I know there might be other reasons, but simply put if they were charging a bit more and generating extra revenues the ones that shut down might survive a few extra months and the current ones just might make more money. Now come on, I am pissed my Platinum Jet Privilege membership is of no value and its hard to get the equivalent in Vistara- still struggling on the lower tiers. I miss the free upgrades and hence, some 'gyaan' along with some simple and some unconventional ideas:

Low cost vs. full-service carriers: Starting off with the controversial one first- I very well understand the concept and need to differentiate the two in metro cities. Multiple flights on the same route through the day, a lot of customers- business travelers, home goers, tourists and the lot wanting to get that ticket at a certain price point. Some willing to pay for the 'premium' image and service of a Vistara, while some happy with the shoddy service on an Indigo to save a few bucks. But often enough a large portion of the fliers don't know the difference beforehand and select a ticket based on pricing only. So, my dear Vistara- I know you introduced multiple fare options with and without meals, etc. but it still doesn't show to the average occasional flier most online portals and you end up having a lower occupancy rate in spite of arguably the best service in the Indian airspace. I say this to be a controversial point because a thorough data-backed analysis will help figure the right price point and placement when it comes to a metro city, but if we start considering the tier 1 and tier 2 city connectivity which often have very limited flights- this is an even bigger problem. Not everyone cares about the full service vs. low-cost carrier difference- its very low on KPC criteria. One would often care about the flight time, price and no-stop vs. one-stop, 'desi' comfort, etc. before even considering the service element

Hopping flights via 'random' destination: A tier 2 city flight to Delhi and then to another tier 2 city makes a lot of sense- I don't have to deboard and can continue my journey. There are enough travelers for each leg of the journey as well so a win-win for everyone. But then again a tier 2 to another tier 2 and then Delhi. Why? Ok- let me take a real example- Vistara will face my ire now, enough praise! Taking the example of the flight no. UK-725 and UK-726 which fly between Delhi and Dibrugarh via Bagdogra airport once a day both ways- look at the pricing table below for a random date, May 20th in this case. For the geographically challenged like me, Bagdogra is in Mamta Didi's state and Dibrugarh in Assam. 

• UK725- Delhi to Dibrugarh = Rs. 5834, Delhi to Bagdogra = Rs. 7198, and Bagdogra to Dibrugarh = Rs. 3462; the last two add up to Rs. 10,660
• UK726- Dibrugarh to Delhi = Rs. 5834, Bagdogra to Delhi = Rs.5148 , and Dibrugarh to Bagdogra = Rs. 3462 and here the last two add up to Rs. 8610

I am sure you can spot the discrepancy in the pricing already, but another point on occupancy first. Now I don't know how would occupancy be measure for a flight which uses the same code across the three possible tickets a customer can buy, but I can say this with pretty high certainty that a lot of seats would go vacant between Dibrugarh to Bagdogra and vice versa because the customers on tier 2 to tier 2 route is significantly less. The implication here is that all the tickets that that get sold on Delhi to Bagdogra route imply that many seats will go empty between Bagdogra to Dibrugarh- in turn stopping people from Delhi to Dibrugarh route to buy that ticket. To further rack your brains, let me bring in an added complication- flight time between Dib to Del is 4 hr 10 min, Dib- Bag is 1 hr 20 min and Bag- Del is 2 hr 15 min. In essence, a bad stopover significantly inconveniencing the passengers from Dibrugarh to Delhi route and vice versa. Now, I know you are itching to argue with me- this to ensure the flight gets utilized fully, the seats would go vacant otherwise. Nopes! Dibrugarh to Delhi route has 3 flights currently with only one being direct- a train journey takes ~40 freaking hours on a Rajdhani (Dibrugarh is far) at a cost upwards of 4K on a tier 3 AC ticket and reservations are hard to get. So trust me when I tell you there are enough passengers willing to take a flight if the right options so appear.

Pricing for 'one-hop' flights: The discrepancy is obvious but let me still call it out. Why sell a Delhi Bagdogra for a 7198 when a Delhi - Dibrugarh is 5834. I know regulations don't allow me but I might just purchase a ticket for Del-Dib and get down during the stopover. Correct the damm pricing! I am sure enough such and more examples can be figured.

Absolute low pricing: Not encouraging cartelization, but why keep fares so low so often just to fill seats. Have a minimum floor pricing which is sustainable. I know this is easier said than done- but not everything can be a piece of cake. The fares some time get as cheap as railway tickets- I am sure you are not trying to do charity here. Give me a bunch of smart IIT kids with analytical skills and we can sort this out once and for all. There are other ways to increase the load the factor- promote the routes as required on certain days- incentivize people to change flight dates through other means. Google flights not often used in India, but allow you to search for destinations based on ticket prices- encourage the holiday traveler to go to a particular city- flight magazines alone won't do the trick.

Why do you need 7 flights a week?: Optimize flight routes please, not just for geography but also days. Give me cheaper Goa and Udaipur tickets- I like to go there. Ok, so you know and I know people will often go to a tourist destination around holidays and weekends and you will have more business flights between metros during the week. I am certain the regulatory authority won't stop you from increasing flights on certain routes and decreasing on some others on specific days. It's not simple, airport slots and all- extra work for employees. But then again 'where there is a will, there is a way.' This one is a win-win for everyone- customers, airlines, airports, govt., economy! I wish the finance minister had more such solutions in her budget speech- a cheap shot I know, I pay a lot of taxes and it ain't going down :(

Alternate revenue sources: This one is a no-brainer and honestly everyone is trying their hand at this but needs to be done more seriously. Not core for the airline industry but definitely has potential for innovation, especially by tying up with the start-up world. Bunch of ideas I have - will name a few, advertisements, product sampling (see Smytten app), and more. The point is you have data for a niche audience in India and that's valuable. Meri nhi to Mukesh bhai ki maan lo- "Data is the new oil". Cred raised a $100M with no revenue sources just based on customer data, Kunal had a role to play but still, think about this.   

This has gotten long, more for later. In summary, a little out of the box thinking is what is needed for the airline industry to turn around. India has the potential to lead the way- who in India grabs the opportunity first is now to be seen. If you struggling to do this, hire my company at an exorbitant-fees, of course, but we will make sure you get a bang for your buck. And maybe my partner gives me a hefty bonus- fingers crossed!