Indian full service carrier Vistara – a joint venture of Singapore Airlines and TATA announced the launch of “Freedom Fares” on 31st July 2018. The fares, which created divides on social media, were open for sale today. It is applicable for flights operating August 29th onwards.
My first reaction was surprise. The fare choice was expected to be one without baggage, instead it was announced that it is without meals!
The “Vistara Freedom Fares” will be menu-based pricing model designed to let customers pick specific attributes. The airline is calling this a “Pay-for-what-you-value” since the changes are mostly non tangible except for fare without meals. The fare will be classified as “Lite”, “Standard” and “Flexi” in Economy and “Value”, “Standard” and “Flexi” for Premium Economy and Business Class.
A buy-on-board option would be available for the small set of people who have opted for Economy Lite fare and a pre-booking option for meal would be available in future. This would mean additional handling for the airline along with the nitty gritty of a buy on board meal like billing, reconciliation and choice offerings. Club Vistara Silver, Gold and Platinum customers opting for ‘Lite’ fares will continue to get soft benefits such as priority handling, additional baggage allowance, and lounge access, as applicable.
The airline has released a detailed chart of the multiple fare types which come into effect today.
Vistara has been claiming that their economy class loads are highest in the industry and the new fare type looks like a revenue management tool to compete with other carriers on specific routes. Unlike airlines in USA, Vistara would not be allocating a seating area for patrons who have purchased Economy Lite fares and thus would not have a restriction for seats sold as Economy Lite. This also means that there may not be any seats which are sold as Economy Lite.
I checked for random dates and found that certain sectors (Eg: Delhi – Pune – Delhi, Delhi – Guwahati – Delhi) did not have Economy Lite on offer, the sectors where it was on offer (Eg: Mumbai – Delhi, Delhi – Lucknow) on the same dates had a difference of INR 205 between Lite and Standard fares in economy across sectors, irrespective of time of the day or duration of flight.
An airline would typically spend upwards of INR 500 for a meal. Vistara with its Economy Lite fare is taking the meal out and reducing the fare by INR 205. With this fare, the passenger cannot check-in more than one bag, has a restriction on where he would get to be seated (complementary) and cannot use any of the upgrade vouchers. EconomyLite fare will be non-refundable. Assuming that 40-50% of passengers opting for Lite fare would purchase a meal, the airline would earn more revenue per passenger opting for Lite fare than it would from passenger opting for Standard fare. While social media was out in open to talk about brand dilution, I would wait for this to be answered in due course of time. I would rather focus more on the incremental costs and if they are worth all the pain.
In the end, one question remains, why would an airline which is touting “meals” as its USP, offering fares without meals?