Effect of airfares on an idle mind!

They say an idle mind is the devil's workshop. In a twisted sense of analysis, that idiom is looking to be proved correct! I do have some free time on my hands, and I recently learned some statistical concepts. So I said to myself, that I must try and implement some of the stuff I learnt, in the analysis of fare pricing in the Indian aviation market.

Allow me to clarify up front, that the data I'm testing is an extremely limited sample. Further, I'm not looking at extensive periods to analyse data, nor am I looking to predict future airfares. Nonetheless, the analysis I've done seems to be supported by the general action that's taking place in the Indian aviation space. So, here goes...

Data used and methodology

I decided I'd stick to some standards, and so I identified specific routes, and set some conditions, as below:

  • Routes: Return flights selected for inter-metro routes (DEL, BOM, MAA, CCU), and metro to nearby major airport (150-250 miles) routes
  • Dates: onward on 27 Nov, return on 29 Nov (selected randomly)
  • Airlines: 9W, AI, 6E (Indigo), G8 (Go Air), Jet Konnect (operates variously) and SG (SpiceJet). Note, that out of 10 routes sampled, 9W and 6E don't fly on one each, and G8 doesn't fly on 4 routes.
  • Fare types: only combo fares selected, which means the same airline is used for onward and return trips. This prices in a combo discount, but also means limited flexibility
  • Flight timing and duration: not considered
  • Fare consideration: lowest fare available on combo pricing on the airline selected
  • In-flight services: Because low-cost carriers charge for in-flight food, I set up two data tables: one with just the fares, and another with the fares plus Rs 500 for food (Rs 250 each way) to be comparable with the full-service airlines.
  • Other costs: the only other costs that come readily to mind are in relation to priority seat selection. I've not considered that in the costs, but you can read my earlier post about that, here.

Summary of analysis

Here's what I found, for the base fares.



And here's the data when Rs 250 per segment is included, for flights with low-cost carriers.



Note: the colour scheme moves from green (lowest fare) through shades of yellow (closer to the 50th percentile) to red (most expensive).

Results

And here is my interpretation of the results:

  1. Air India is the most expensive airline generally, across all segments sampled. Depending on the route, AI is between 15% and 64% more expensive than the average airfare of the other airlines plying that route. There's not a single route where AI has the lowest or one of the lowest fares. However, on the CCU-IXA segment, this disparity on rates goes down, given AI's presence in the North-East part of the country.
  2. The standard deviation (a factor representing the variation or disparity from the average) on most of these flights is quite large. This only means, that there are quite a number of fares that deviate on both sides, from the average. However, because of (1) above, a good part of the standard deviation can be attributed to AI's high prices. If AI is excluded from analysis, the fares on most of these sectors fall within a much more acceptable range of deviation.
  3. On a majority of the sectors, LCCs on average charge more than 9W (I'm excluding AI for the reasons mentioned in (1) above). This holds true even if G8's exceptionally high fare on CCU-BOM is excluded completely from the analysis. In fact, out of the 10 routes sampled, 9W exceeds the average LCC fare on only ONE route, and is below the average LCC fare on 8 routes (on the 1 remaining route, 9W does not have a flight). And even that one flight (MAA-DEL) where 9W's fare is higher, disappears if you consider food costs (see table 2 above). Also, optically speaking, there are far more greens in 9W's data!
  4. Even on intra-metro flights, MAA-DEL (or BLR-DEL, which is not in the above analysis) is the best value, in terms of cost per mile flown. This is useful for mileage running, though given the dynamic tier review that 9W's Jet Privilege program has, each segment counts towards tier upgrade/requalification, and so needs to be viewed differently.
  5. Significantly, Indigo (6E) and SpiceJet (SG) have identical fares on 7 out of 10 segments. Of the remaining 3, 6E is higher than SG in one case, lower in one case, and 6E does not operate one segment that SG does. This is interesting, though I can't be sure who is following whom!
  6. You have got to be careful when booking with Jet Airways. Some flights marketed as Jet Airways flights tend to be cheaper than the same flight marketed as a Jet Konnect flight, or vice versa. There are 2 such examples (MAA-BOM and BOM-DEL) in the above analysis.

My eventual conclusion is, that low-cost carriers aren't really *that* low cost.

I'm sure there's a lot more analysis that can be done, and interpretations that can be drawn, from the above data. There will also be much more to glean from a deeper analysis of an extended data set. But for now, the idle mind has grown into a tired mind...auf wiedersehen.

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