Friday, January 04, 2008


In her article in the “Corporate Dossier” ( supplement to The Economic Times), Rama Bijapurkar writes:

… Ironically, the infrastructure collapsing all around us will make some sectors gain. To illustrate this with an example. Too much air traffic and too little airport capacity may lead to enormous waste of time and energy and aircraft fuel. And for each person delayed at the airport, there is the cascading effect of at least three more people whose day is derailed as a result. But then the cell phone industry is laughing all the way to the bank- people are on the phone all the time, re-scheduling again and again and again. ..The food business at airports have gained- so many bored travellers, quaffing beverages and as the supply of food at airports grows (dimsums are now available at Delhi airport) they are spending more than they usually would have.

Though she hasn’t stated it in so many words , finally, I understand the business model of these low-cost airlines. Lure people with incredible low fares and ensure their footfall at the airport. Once they enter and are held captive there due to delayed flights, they will spend two to three times the cost of their airfare on mobile phone calls and snacks at the cafeteria. I suspect that the phone companies and the caterers then pass on a hefty commission to the airline that obliged them with the delay in the first place. The airline thus recovers more than the full fare. The whole thing is like the seemingly complicated but elegantly simple structuring that Enron used to conjure up.

Almost all the interactive and reality shows on TV collude with the mobile phone companies to make millions of viewers send out messages that are charged much higher. So, the theory of airline-phone nexus is not too far-fetched.


dipali said...

Sounds plausible, doesn't it?

Usha said...

Next time I am delayed at an airport I am borrowing a cellphone from the airline counter to make my calls!

Raj said...

dipali, it sure does.

Usha, I am sure they will charge you.