In India, More Fly Premium, Business Classes as Pandemic Ebbs - Aviation Pros

Mar. 28—NEW DELHI — As travel resumes normalcy after the pandemic, several tour operators and airlines are reporting that demand for business and premium economy tickets has risen compared with the pandemic and pre-pandemic period.

With air travel, especially business travel, slumping during the pandemic and economy-class airfares skyrocketing, an unintended consequence was that the gap between economy and premium economy tickets narrowed.

Travel agency Thomas Cook India has seen a 50% jump in business class travel versus last year as corporate travel resumes. Overall, there is a 5-10% growth in demand for premium seats compared with the pandemic year of 2019-20.

While demand for business class tickets extends across most metro sectors such as Mumbai, Delhi and Bengaluru, the growth per sector has been about 10% for Southeast Asia, Dubai and Abu Dhabi; 5% for Europe, the UK and Australia; also 5-8% for metro routes in India, said Indiver Rastogi, president and group head, global business travel, Thomas Cook India and SOTC Travel.

Deepak Rajawat, chief commercial officer of Tata SIA Airlines Ltd owned Vistara, said this could be because pent-up demand continues to spur travel. "Customers are more willing (now) to spend a little extra for a premium experience. We have been observing a healthy demand across our network with an uptick for premium cabins. The premium economy cabin has gained prominence through the pandemic. The subscription of business class has also grown to be popular among business and leisure travellers."

Online tour operator MakeMyTrip has reported a surge in the sale of premium class tickets on domestic flights, with numbers tripling over pre-pandemic levels. An IndiGo spokesperson said that ancillary and unbundled services such as preferred seat selection, pre-booking of meals, additional baggage, etc., are gaining popularity across airlines globally.

"We are noticing a substantial increase in upgrades from economy to premium economy classes. Considering high airfares in the economy category of about 30%, many Indians are trading up their travel to premium economy and business class seats instead because of the narrowing price difference between the cheaper and the more expensive categories. If we compare our business to the pre-covid period, there is an increase of at least 35% in demand for premium seats," said Michael Jain, director of Belair Travel, the company that runs CheapTicket.in.

He added that airlines are also providing last-minute airport upgrades by charging a little extra amount, which could be helping with the upselling. In addition, some airlines also offer incentives to airport staff for providing airport upgrades to customers.

But the story changes a bit on the international front. For MakeMyTrip, the gross percentage contribution of premium classes has seen an upward swing, but the actual number has not changed significantly. "The increased traction for premium classes gains further significance when one considers that ticket prices for international travel have risen by double digits percent over the past three-odd years," said Saujanya Shrivastava, chief operating officer, flights and Gulf Cooperation Council for the company.

RateGain Travel Technologies Ltd, a company that provides software as a service to the hospitality and travel industry, said the share of business class tickets came to 2.43% of all the outbound air tickets in January and February this year vis-à-vis 1.91% in January and February last year and that this was the highest share that business class flight bookings have registered since the pandemic.

"There is higher spending since covid-related restrictions were lifted. People want to spend more and have a higher quality of service. There is a greater emphasis on the travel experience compared to the destination of travel," an industry expert said.

According to the latest data from the Directorate General of Civil Aviation, domestic air traffic in India for February stood at 12.1 million, 6% more than the pre-covid period of February 2019. The civil aviation sector has witnessed an almost V-shaped recovery to surpass the pre-covid average of about 410,000 daily passengers.

While demand for air travel is soaring, India is still at around 4-5% penetration rate in terms of air travel. Hence there is higher scope for a continued increase in such inclination towards a higher quality of service, he added.

"India today has become an aspirational country. Aviation infrastructure must be put in place to support the $20 trillion economy within India by 2047," Union aviation minister Jyotiraditya Scindia said last week.

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