Air India aims for big revenue boost from array of ancillary services

AIR INDIA is looking into making substantial revenue gains running global courier service, advertising on inflight entertainment and monetising frequent flyer miles, reports India's Business Standard

"Globally, airlines generate 10-12 per cent of revenues through commissions earned from tie-ups with hotels, restaurants and shopping malls, where registered fliers can redeem miles earned or receive discounts," a senior Air India official told the Business Standard.

"With over one million frequent fliers, which we aim to double this fiscal year, we can make at least six to eight per cent more revenues by monetising our Frequent Flyer Programme (FFP) base," he said.

Industry sources say American airlines make US$1 billion a year from commissions paid on facilities availed of by frequent fliers. Once the plans to monetise the FFP base attain scale, Air India expects to generate INR10 billion (US$182 million) annually.

The state-owned flag carrier is also looking at starting a courier service for central and state governments and big corporate houses by the second half of this financial year.

"We have the widest reach, both in the domestic and international markets. We fly to as many as 65 destinations within the country. We are now looking at optimally utilising our surplus capacity and manpower to commence courier services for central and state governments, public sector enterprises and big corporate houses. We will create a separate division within Air India to manage the venture," said the official.

Air India's earnings of one to two per cent of total air cargo business of INR9 billion a year is deemed to be almost negligible. The new business, along with the state-owned carrier's plans to generate advertising revenue through advertisements on its in-flight entertainment systems, boarding passes and airport lounges, are expected to bring in as much as INR4 billion and INR5 billion a year.

Other schemes involve the sale of land, properties and paintings, projected to bring in INR12 billion in the current financial year, INR20 billion in FY15 and INR18 billion in FY16.