Monthly Archives: July 2014

Buying an air ticket for Rs999? Here’s what you need to know

What triggers a flash sale?

Airline seats are the ultimate perishable commodity: once the aircraft departs, the empty seat’s revenue is lost forever; the seat cannot be put into inventory, like a bar of soap, for example, to sell another day. An airline cannot easily change the size of the aircraft (its production unit) based on demand. Switching off the production line for airlines essentially means cancelling flights for commercial reasons, which is not a good practice. Therefore, airlines are constrained in what they can do to manage capacity and match it to demand. This prompts the creation of complex revenue and inventory management systems, and the use of tools such as flash sales. These ensure fewer units produced in a fixed production line go unsold.

spicejetcounter--621x414

Are flash sales offered to generate working capital for airlines?

Perhaps, but not always. Stimulating fares are an international practice. There is, of course, a school of thought that airlines, like any other industry, are selling products (tickets) to generate revenues, which are then used to pay bills. “When budget airlines abroad do it… it is okay, but it’s not okay if a low-fare airline brings this approach to India? Regardless of the cost position in India (which is high), these advance purchase sales generate incremental revenues, therefore are a positive and help defray more of the costs,” said an executive from a low-fare airline who did not want to be identified. That said, flash sales by some of India’s cash-strapped airlines seem driven by a desire to raise working capital.

How does a flash sale work?

Flash sales essentially work to stimulate demand and fill seats that might otherwise go empty and be lost forever. Even in a peak season, airlines fly with 10-20% of their seats empty. Simply lowering fares across the board to fill seats is not the answer, as this would reduce revenue per aircraft and for every seat in the aircraft. Flash sales are decided by aircraft capacity and structured to minimize dilution of revenue for seats that could be sold later at a higher price to less price-sensitive customers. The goal is to sell excess seats at a marginal cost, without reducing the demand for, and fare received, on the remaining seats that would sell later, anyway. Properly done, these sales increase revenue per aircraft and revenue per available seat-km (RASK), which is also an indicator of the airline’s profitability. It is a simple application of the economic theory of customer segmentation through price discrimination. These schemes are highly restrictive and, therefore, not attractive to those who value flexibility. But they are designed to be attractive to those who may not have made that booking otherwise.

Do flash sales work?

If managed efficiently without revenue dilution, these stimulation techniques actually increase revenue. Before such techniques were perfected, airlines used to sell discounted tickets without proper inventory control, advance purchase requirements or restrictions, making them counter-productive and diluting revenues. But if the inventory is controlled, flash sales not only sell the discounted tickets on offer, but also increase the sale of tickets which are not discounted. For example, if discounted tickets sell out in one direction of a two-way trip, the customer typically buys one leg at the regular fare and the other at the discounted fare. The customer also buys in-flight meals and goods, adding to revenue. So, flash sales help sell more than just the discounted tickets. “Airlines have always looked to increase the advance purchase sales and make the booking curve healthier towards the end. The recent flash sales have shown a 65% surge in advance purchase bookings,” says Samyukth Sridharan, chief operating officer at Cleartrip Pvt. Ltd, an online travel agent. In other words, there is no cut-throat competition among airlines.

Any other benefits?

Free advertising! Newspapers, television channels and social media lap up news about flash sales. The free advertising impact of such sales is huge. For low-fare airlines worldwide, such sales are excellent marketing. It gets more people to visit the airline’s website and possibly buy tickets. “Another interesting angle is the advent of new bookers, and again reiterates the huge opportunities that exist to get people to experience the air travel experience,” Sridharan of Cleartrip says. His firm saw over 24% of new customers making their first purchase during these flash sales. “Stimulating advance purchase works on various grounds. Firstly, the opportunity to tap the large leisure segment of customers, which is a strategically important customer segment for airlines. Secondly, it helps airlines get predictable loads on their flights well in advance,” Sridharan adds.

Do flash sales push up regular fares?

A typical airline ticket in India is sold below cost. RASK in India is among the lowest in the world. According to airline executives, fares closer to the date of travel, especially within seven days of travel, are almost absurdly low. An almost two-hour flight at the last minute, say Mumbai-Delhi, costs less than $200 one-way in India. It would be much higher anywhere else in the world, sometimes by up to three or four times. Customers who book at the last minute tend to be less price-sensitive and do not mind paying more, to an extent. Airlines generally do not stimulate demand for those willing to book early and willing to accept restrictions in exchange for lower fares. On the other hand, they may not have done enough to leverage customers who do not mind paying more for last- minute availability, flexibility, and convenience. So, yes, fares may go up for last-minute bookings.

Why only low-fare airlines and not full-service airlines?

There are two different business models at play—full-service airlines and low-fare airlines—and a “one-size-fits-all” approach does not work. They need different pricing strategies. Full-service airlines want to keep more inventory available for higher-value last-minute sales, which is their core: corporate travel. Budget airlines sell less at the last minute; so, they do not want excess inventory left over. Discounting at the last minute is the worst thing an airline, regardless of the business model, can do as it just leaves money at the table and benefits those who would have paid more any way. In general, budget airlines all over the world want to get rid of excess inventory early. In India, budget airline executives allege that full-service airlines constantly discount and undercut others at the last minute, the opposite of what they should be doing. This, they say, damages both, as there is no need to discount like this at the last minute when customers are least price sensitive. Interestingly, India’s full-service airlines have followed flash sales by low-cost airlines with price-led promotional offers of their own.

Which are the craziest flash sales?

Several budget airlines, including AirAsia, have given millions of seats away for free. SpiceJet had a Rs.1 sale. These may appear crazy, but there is a method in the madness. Even under such schemes, the whole aircraft is not discounted. Airlines selectively sell seats which, in their calculation, would otherwise go empty. Those who book early get the cheapest tickets. Others get tickets too, but not at the flash-sale price. For an airline, what is crazy, though, is selling deeply discounted tickets at the last minute during peak season.

How are current flash sales different from those in the past?

Full-service airline executives claim budget airlines conduct fire sales to get working capital and that they are no different from the past. But the flash-sellers differ. An executive from another low-fare airline said, “I believe they (flash sales) are better planned and fenced now. Let me tell you what I find curious. On the one hand, airlines in India are accused of being a cartel. But when an airline does something different in terms of pricing, the same people say it is ruining things for other airlines, and question you if other airlines do not follow.” What is required, cartels or free competition, he asks. “Same pricing across all airlines, or airlines that actually price differently based on their business models and strategies?”

Can we expect more flash sales?

Of course. With increased competition, passengers can expect more such sales. Travel agents confirm that passengers are seeing savings of an average 30-40%. In some cases, flash sales have resulted in savings as high as 75%. Flash sales are an ongoing activity for budget airlines. Besides, AirAsia India has started flying and Tata-SIA will follow. More offers are on the way.

Advertisements

Tatkal tickets on shorter train routes have become exorbitant. Here’s why

Indian Railways does not want passengers to Tatkal travel over short distances. Railways has therefore altered its definition of short-distance travel to charge an even higher premium from passengers. Many were in for a shock when trying to book Tatkal tickets for train journeys shorter than 500 kilometres when they found that the base fare inexplicably shot up, in addition to the already hefty Tatkal charges.

For example an AC 3-tier ticket on the 12156 Bhopal Express from Hazrat Nizamuddin to Gwalior costs Rs 590 of which Rs 484 is the base fare. But if we were to book the same under Tatkal, the ticket price shoots up to Rs 1065 because of the Rs 250 Tatkal charge and the base fare rising to Rs 692. Which means a passenger has to pay an additional 80.5% fare. Become an authorized IRCTC agency

tatkal-nzm-gwl-180714

This  made it appear to some that it could have something to do with the revamped IRCTC website and even lead to complaints against the IRCTC on consumer forum websites, but as it turns out this isn’t the case.  This surge in short-distance Tatkal reservation prices is because the Railways has amended its Tatkal rules, but hasn’t even bothered to inform the people it impacts the most – the passengers. We couldn’t find any mention of it on the IRCTC website or even the official Indian Railways website at the time of posting this and also our email to the Indian Railways public relations officer hasn’t received a response even after four days.

The answer finally appeared in an Unstarred Question asked in the Rajya Sabha on July 11. KN Balagopal, a CPI(M) MP from Kerala, asked the Minister of Railways about the new distance limit (up from the previous 200km) on issuing a Tatkal ticket and also pointed out that “this decision causes difficulties and financial loss to short distance travellers, especially travelling within small States like Kerala.” In his response, Manoj Sinha, Minister of State for Railways, said that the new Tatkal rules were meant to “discourage short distance travel under the Tatkal scheme,” and also provided details on the minimum distance for booking tickets under the Tatkal scheme. The minister also said that “no change in policy is contemplated at present.” Become an IRCTC authorized agency 

know-your-ticket-180714

Revised minimum distances under Tatkal scheme

Second Sitting: 100km

AC Chair Car, Executive Class: 250km

Sleeper, 3AC Economy Class, AC 3-Tier, AC 2-Tier: 500km

The new rules don’t mean that passengers are prohibited from travelling over short distances on Tatkal tickets, but the price they need to pay for this has now become prohibitive.  For short distance Tatkal travel, passengers will be charged for the prescribed minimum distances irrespective of the actual distance travelled. Therefore a passengers travelling on AC 3-tier Tatkal tickets from Hazrat Nizamuddin (New Delhi) to Agra Cantonment (188km) or to Gwalior (306km) or Jhansi (403km), all have to pay the same minimum fare Rs 1065.

 

Tagged , , , , , , , ,

Now, select your seat

Looks like Indian Railways is following the airline industry in offering passengers customised service. It will now allow passengers to select the coach too while buying tickets online.

Hitherto, passengers could only select the berth while booking online. However, the Railway Budget has expanded the scope of online booking; passengers can now select the coach, berth and the seat in chair car.

“Invariably, I end up walking more than one km at Chennai Central to take the bogie near the engine. Now, I can select the coach that is closer to the entrance of the station,” said S Kausalya, a senior citizen, who travels to Kozhikode frequently.

IRCTC

As is known, air passengers can select their seats depending on their preferences. However, some seats come at a premium, especially in low-cost airlines. It is not clear whether a premium will be collected by the Railways too on some of the new initiatives, said sources.

The Railways launched the online train reservation facility in August 2002 and booking of ticket through SMS last year.

In 2012-13, 14.06 crore tickets were booked through the website of the Indian Railway Catering and Tourism Corporation Ltd against 11.61 crore the previous year. Nearly 50 per cent of the total reserved tickets of Indian Railways were booked through the site, said IRCTC’s annual report for 2012-13.

Out of the ?720-crore revenue posted by IRCTC in 2012-13, nearly 27 per cent came from Internet booking, the report said. Become an authorized IRCTC agency

Retiring room

The Minister also announced that the facility of online booking of Railway Retiring Room would be extended to all the stations during the course of the year. The railway reservation system would be revamped into a next generation e-ticketing system. Ticket booking through the mobile phone and through post offices would be popularised. “We will improve the system capabilities in e-ticketing to support 7,200 tickets per minute as against 2,000 tickets and allow 1,20,000 simultaneous users at any point in time,” the minister said. Efforts would also be made to provide the facility of buying platform ticket and Unreserved ticket over the internet, he said.

Forget IRCTC, these apps can make your train travel better

The Railway Budget presented by the government has seen mixed responses from the political circles. But what caught the eye of everyone was that the budget addressed a lot of digital developments. From plans for Wi-Fi in stations and on trains, Railway Minister Sadananda Gowda also laid out plans to upgrade IRCTC’s online ticketing infrastructure. A proposal to raise the number of bookings from 2,000 per minute to 7,200 was also proposed by the minister in his budget speech. However, some of these facilities are already available thanks to private companies. Become an IRCTC Agency
IRCTC-website-2014-07-13-670x400

While the new Railway budget has already made provisions for improving the quality of food on the trains, private companies like Travel Khana have already been in the market. The Web-based service lets you place an order and then track the food until the food is delivered when the train reaches the selected station. At present, Travel Khana has ties with over 1,000 restaurants across the country and offers food deliveries to trains in 80 cities.

Travel-khan

The Rail Minister had also proposed a mobile-based wakeup call systems, and destination arrival alerts to help travellers disembark at stations late at night. A similar facility is already available with the Indian Train Alarm app. This app can help make sure that you don’t miss the station you were destined to. Available on the Google Play store for free, the Indian Train Alarm app has over 2,500 Indian stations in it. The best part about the app is that it is functional even where access to internet is not possible.

Indian-train-alarm-app

Rail Radar was relaunched by the Rail Yatri, the very same company that developed it, after the government pulled the plug on the programme last year. The app lets you track where all trains in the country are, in real-time, on a map. It helps you identify trains that are running on time or running late. Rail Yatri also has an Android app which give information on live train, coordinates with Travel Khana for food deliveries and includes features to check speed of your train. Become an Become an IRCTC Agency

NTES
If you want to quickly check timings and status of a train, then NTES website is what you looking for. The website assists users in checking train timings, in getting live updates from stations and briefs them on cancelled, diverted or rescheduled trains. Don’t worry if you don’t have an Android phone, you can use the Indian Train Status app to get similar information to the users. The Indian Train Status app will not dissapoint you as it uses information from the NTES.

PNR-status

Launched by online travel agency Ixigo, PNR Status Rail Flight Tracker helps you stay on top of your travel plans. The app is available for free on the Google Play store. As its name suggests, this app can find all PNR details by checking your inbox for messages from IRCTC. It also keeps a record of your travel time, and helps you view, manage and track your trip status. What more, the app will also update you if a booking changes status (from wait list to confirmed) and also alerts you about delays or cancellations. Become an IRCTC Agency

IRCTC Agency

IRCTC Agency

IRCTC Selling User Email IDs To Spammers And Here Is The Proof

saw an interesting tweet from a friend today on Twitter timeline which said, “Apparently IRCTC is selling its email database to spammers. Getting SPAM on my irctc-only email address”.

I was quite surprised by this, because IRCTC is a big huge government organization, and a bureaucratic one too. For IRCTC, as a organization, to sell user email IDs to marketers or spammers is something I could not believe. So, I decided to dig further. It became quite clear that the email ID on which he received the unsolicited email was used for nothing else apart from IRCTC account registration .
Many users who value their privacy generally use different custom email IDs for registering on different websites (they do it by way of catch-all email functionality, where prefix of mail could be anything and yet all mails arrive at same mailbox), so when they receive any spam on a particular ID, they immediately know the source from where the email ID has been leaked.
In this case it was the ID specifically created for IRCTC: All the emails have been sent to – the email that was created for IRCTC registration. This email was not used elsewhere for any other purposes.

It is quite safe to say that it was not one-off instance and clearly a case where his IRCTC email ID was sold (or shared) to marketers.
Now, just to make sure that IRCTC does not have permission of sharing users’s email IDs, we went through the terms and conditions as well the privacy policy of IRCTC website. It clearly states that they do not collect any information. Here is the screenshot of what IRCTC website says:

IRCTC-terms-and-Conditions1

Forget about sharing the email ID, the privacy policy mentions that they do not even collect any unique information about users such as your name, email address etc.
Now, I do not know who has drafted this privacy policy, but they clearly do collect user’s email addresses, name and some other personal information as well (How else would they show it in user account everytime they login)! However, they also clearly mention that IRCTC will not share your personal data with advertisers, business partners, sponsors, and other third parties without your express consent.
Does IRCTC sell registered user Email IDs?

We surely have a clear proof that IRCTC email address is compromised, but the question is whether IRCTC themselves do it?
In our view, it is nearly impossible for a govt organization to do anything of this sort. But think about people working inside IRCTC. The system administrators or the software engineers or anyone who has access to the database. They have access to millions of email addresses and that is a potential gold mine and easy money!
In all probability, IRCTC employees having access to user database are responsible for email ID compromise.
Having said that, from user perspective, it is IRCTC who is responsible for the breach and not any one single employee (and hence the title)!

Credit: Arun Prabhudesai

Tagged , , , , , , ,