Will Mobile Phone Operators become the New Age Bankers?

“Banking is essential to a modern economy. Banks are not.”

                                                                                    —Edward Furash (1993)

Much competition in telecom sector has reduced the Average Revenue per user for mobile service providers. Inorganic Growth is costly in this sector as it is very capital intensive. This has led Mobile Network Operators (MNO) to find new avenues of growth. Mobile banking proves to be the next big opportunity for mobile phone carriers. Even though many banks provide some or other forms of mobile banking solution, the penetration of mobile banking is still in nascent phase in many economies around the world. Mobile phone carriers can fill this gap by providing a portfolio of banking services. In addition to it, mobile banking by MNO has the potential to bring basic banking and financial transactions services to unbanked consumers in the world.

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Unbundling services in civil aviation

With Kingfisher already gone bankrupt and the rest fighting it out for the small passenger base, the aviation industry is one place making survival tough for all the players.

Air Asia is all set to enter the market and this again as a nightmare for the already reeling industry. Unbundling the services in civil aviation for the domestic sector at such a crucial time has come as a boon for the operators. The operation costs have been going up and the passenger count has remained more or less stagnant in the present economic scenario.

The history of low cost carriers dates back to 1971 when Dallas based South West Airlines started its operations. In India, the trend was set by Air Deccan in 2003. From there on the price war amongst the different carriers became fierce with all the major carriers either reducing the fares or launching a second line (low cost) to withstand the competition (Eg. Jet Connect etc.).

The price war was getting stiffer and the pressure on profits was mounting. This was visible with Kingfisher’s case (though mismanagement too played a great role in its case) and many of the other operators posting losses quarter after quarter.

The present move of DGCA to unbundle the services has been very well received by the operators with major operators like Indigo, Jet Airways and even Air India incorporating the changes within two weeks of the decision. Indigo is already charging extra for window and aisle seats along with seats in the first, second, last, and second last rows. The free baggage allowance has also been reduced by Jet Airways and Air India from 20 kgs to 15 kgs in ecnomy class travel with different airlines charging different rates for the same. Also, Air India and Jet Airways are planning to charge for food and drinks on board.

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IIM Raipur - A Sneak Preview

IIM Raipur - A Sneak Preview

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