Abacus To Tap India’s Low Cost Aviation Phenomenon

Stuart Crighton

Soon To Launch Tailor-made Basic Booking Request Systems

Bhisham Mansukhani - Mumbai

Abacus is positioning itself to tap India’s forthcoming low cost phenomenon with a stripped down version of its booking request systems according to Stuart Crighton, head, south and west Asia, Abacus International Pte Ltd. However, Crighton insists that network carriers will continue to represent Abacus’ biggest business generators and may infact at some point, opt for the low cost reservation models themselves to trim costs and compete.

Abacus also recently revealed its growth figures for FIT bookings on Abacus systems. For months between January and August 2004, there was a 47 per cent growth over the same period in 2003 and 96 per cent in 2002. The company found its renewed exuberance towards the Indian market to be well placed, quoting from studies that divulged soaring consumer confidence (85 per cent of Indian surveyed in May 2004 expected their economic climate to improve).

Crighton elucidated, “India’s low cost carrier phenomenon is the story of domestic growth, wherein Air Deccan made sales of 1.5 crore on the first day of operations. In cognisance of this, network carriers are distributing their product in more realistic ways. We also have a basic booking request distribution model for low cost airlines which is a scaled down version. That said, our business model is still predominantly built around network carriers but we really do not have to make a choice between the two, rather to evolve our business model in lieu of what is happening. Network carriers are buying a much more complex service that allows them much more flexibility than the basic. As the low cost phenomenon gathers, network carriers will look to cut distribution costs and opt for simpler booking systems.

Crighton however felt it was too early to engage the low cost carriers with Abacus’s alternative booking request systems. “Initially, low cost airlines will not invest in GDS but as they get more competitive, they are going to need to extend their distribution footprint and we still have the best and most sophisticated way of distributing content. Traditional GDS businesses will soon start to work with low cost carriers but perhaps not in a traditional way. We ought to be aware of the changing aviation landscape and evolve a model that can be integrated into their cost dynamics. I do not think it is appropriate for GDS businesses to engage the low cost carriers right now and force their distribution models down their throat. We need to stand by and support their traditional system of distribution and simply help grown their distribution when the time is right. It is in our interest to see the low cost airline phenomenon succeed in India because it will stimulate an entirely different. We invest a lot of money in our products that make Indian travel businesses more efficient. We as a GDS invest in imbuing an awareness of the benefits of our products and we will do the same for low cost carriers.”

Abacus also claimed that Asian travel was on a roll. According to the company’s research, Asia contains 60.6 per cent of world population and 21.1 per cent of the world’s GDP while Asia Pacific alone accounts for 21 per cent of international travel expenditure. India on its own generates US$ 39 billion in travel revenue which contributed to Abacus’s growth in 2004, which was spectacular by its own standards with April 2004 figures betraying a 347 per cent rise. According to Crighton, India is an increasingly important market with outbound bookings expected to triple between 2004 and 2006.

“When one is researching the market back in 2003, we were a tad low key and cautious. Where we are today is significantly further than 18 months earlier down the path. We are now a lot more confident about the offering and where we are going and we have a strategy that complements our overall strategy.

We so far operate in 21 markets. India is very different from the rest of Asia and one can not manage systems or take the same approach as one would in Hong Kong or Singapore. The level of customisation is very high,” Crighton explained.

Going forward, by the end of the 2004 fiscal, Abacus is looking at channeling upto 50 million bookings through the Abacus systems across all of our 21 markets. This translates into one in every two bookings. “We have seen an increase of 99 per cent over 2002 figures and the interesting thing about that is that we have achieved this without expending too much resource on marketing. India, China, Vietnam and Indonesia are our most promising markets, as they represent our upside and have a captive, highly maturing consumer base. We see India globalising in the next five years and this is incredibly relevant to the management fee concept which will also compel us to do business differently to remain sustainable,” Crighton said.