Loss making airlines and profitable aggregators

The Indian skies are witnessing a strange situation. Most of the carriers who form the backbone of Indian aviation industry are suffering from huge operating losses – from a combined effect of lower ticket pricing and increasing fuel costs – or so they claim.

The ticket selling sites like MakeMyTrip,Yatra etc on the other hand seem to have it pretty good. Though a big chunk of their revenues now comes from tours and hotel bookings but one fails to understand why the airlines still depend so heavily on them. There was a time (the pre internet explosion era) when you needed a lot of agents to sell tickets to ensure the seats were almost full, but now when each airline has its own site why do we let the customers use the internet channel to book through an aggregator.

A customer does this because there is an ease of comparison and the ability to easily find the lowest price or most convenient combo etc across multiple airlines. I am told that aggregators are smart at predicting the traffic they would see on their portals and tend to bulk buy seats (atleast on busy sectors) well in advance. This ensured that the customer was getting a decent price for his seat on the aggregator. Low price + convenience is a very compelling proposition for users.

Fast forward to today. If as an airline, I am not recovering my operating costs per flight, should I not look at transitioning my sales to in-house channels. A drastic cancellation of this channel is not possible as it would lead to a sudden drop in ticket-sales and hence the occupancy rates. BUT why can’t the airlines start a campaign which says for best prices book directly on their own sites. This would atleast start getting them those customers who don’t value the convenience as much as the price differential. These customers might start using the aggregators to search for the best options and finally book the tickets on the airline site.

I also know of some people who travel on sectors like Delhi-Guwahati, take a particular airline always, but still book it at an aggregator site.