Carrier Competition Growing In India Biz Travel Market
<B>Carrier Competition Growing In India Biz Travel Market</B>
By Neelam Mathews
Business traffic to India has been under pressure of late, due to a capacity restraint of airline seats. Demand for seats has been accelerated by an increase in business travel to the United States following an unprecedented growth of the software industry, for which North America accounts for 50 percent of the world market.
According to India's apex body of the software industry in India, National Association of Software and Service Companies (Nasscom), the Indian software sector had generated an export revenue of US$780 million during the first quarter of 2000, as compared with US$504 million during the same period in 1999.
Canada also has started a software pilot program to accelerate the movement of Indian software professionals to Canada, creating a further demand for seats. Indian software companies Tata Consultancy, Wipro, Pentafour and Satyam Infoway increasingly are relocating staff to Canada in order to access the North Atlantic Free Trade Agreement market.
Seat capacity in July received a thrust, following Virgin Atlantic's twice-weekly flights from London to Delhi, which is expected to increase by an additional flight in October. And in April 2001, United Airlines will introduce its around-the-world service, Washington-Hong Kong-Delhi-London-Washington. The increase in capacity, according to many travel management companies, will provide corporations with better negotiated rates and additional value-adds.
For one, Balbir Mayal, managing director of New Airways Travels, "expects a 20 percent decrease in fares once United flies into India."
However, Virgin chief Richard Branson said the introduction of Virgin's flights to India likely will see more competition in the fares being charged on the London-Delhi route, rather than from Delhi to London as fares there are not regulated.
"The demand is huge and several hundred thousands of people have to fly through third destinations to reach the U.K. and U.S.," he said. Virgin is asking for 14 frequencies to fly daily between London and both Delhi and Mumbai.
The bulk of the corporate travel business, though, still is expected to go to British Airways. "We offer more flights into and out of India, including a daily service from both Mumbai and Delhi and connections from Chennai and Calcutta," said a BA spokesman. "Besides, Virgin does not have a first-class section and its partner Air India's premier products are not accepted in the market."
To which Branson replied: "Our business-class cabins have economy-class fares; we have a first-class product in our business class."
Dhruba Mukherjee, Sita Travel-Woodside Travel Trust general manager, said, "Virgin is in a stage of infancy, and negotiated deals with airlines have already been signed for this year."
On corporate negotiated rates, Virgin general manager of India, Mackenzie Grant, said, "Our business class product is not price-related. We plan to focus on its product benefits."
Service-wise, Virgin is the first carrier to enable business- class passengers to receive calls on their mobile phones inflight, and other add-ons include a limousine service from the airport to the residence.
Mukherjee said that United will bring in strength starting in April. "We can expect to see better negotiated deals with additional cuts between 10 percent to 15 percent." He said corporations were beginning to demand automation as value-adds, including providing routine requisitions to sourcing automated solutions and MIS reports. Companies also are beginning to take control of value-adds by introducing corporate frequent flyer programs.
However, "schedules and gateway points into India are major priorities of the business traveler and Virgin has flights taking off only from Delhi," said Mukherjee, who added that competition on the sector likely will heat up when United begins flying into India.
Lucent Technologies currently negotiates airline deals on a global and regional basis, with Hong Kong as Asia's regional head office. Lucent purchase director Milesh Ruparel told BTN that "Lucent's global deal with United will prove useful once the carrier starts flying into India. T&E is the third largest expenditure in corporations, so we are looking at controlling costs."
He was candid that the value proposition was a combination of several factors and not entirely based on price. "We look at schedules, timing, shortest transit connections, technology and safety of a carrier when negotiating deals," he said. A major value-add for Lucent when negotiating fares has been lounge upgrades and availability on arrival for senior executives.