• The Core
  • Posts
  • Why Airlines Sell You Bad Seats

Why Airlines Sell You Bad Seats

In partnership with

In today’s edition — how airlines juggle soaring demand, faulty seats, and passenger trust; why foreign portfolio investors (FPIs) seem to prefer Initial Public Offerings (IPOs) over secondary markets; and how rising temperatures could drive higher agri loan defaults.

THE TAKE 

A Minister’s Bad Flight Sparks a Bigger Question

Union Agriculture Minister and former Madhya Pradesh Chief Minister Shivraj Singh Chouhan travelled economy last week on an Air India flight that, by his own account, did not go too well.

His seat was apparently broken on the Bhopal-Delhi flight. While he said he did not care about sitting discomfort, he criticised the airline for charging passengers full fare for defective and uncomfortable seats, calling it unethical. "Isn’t this cheating passengers?" he asked.

Chouhan also expressed disappointment that, despite Air India’s takeover by the Tata Group, service levels had not improved as he had expected.

He added that when he asked airline staff about his seat, they told him that the management was aware of its condition and that the ticket for that seat was not supposed to be sold.

It is, of course, interesting that the aircraft in question, a fairly new, two-year-old Airbus A321, had seats that were in poor shape.

The issue, then, is not just whether the minister’s seat was broken, but that the airline knowingly sold a full-fare ticket for a defective seat—at least, that appears to be Chouhan’s argument.

This is, of course, not a new problem for Air India and reflects a larger issue that many companies face: the trade-off between repairing or upgrading products at a time of strong demand.

High Demand, Low Service—Aviation’s Trade-Off

Because aviation is a cyclical industry, airlines naturally try to maximise revenue before the tide turns again.

Air India could perhaps be given the benefit of the doubt, but that is increasingly difficult. Complaints about seat quality and in-flight entertainment on Air India’s international routes—especially the lucrative New York sector—are well known.

I can personally vouch for at least one such experience, having endured barely functioning seats and an in-flight entertainment system with almost no content—let alone any actual entertainment—on a 14-hour flight from New York to Delhi. This was post-privatisation, incidentally.

Last year, India’s domestic airlines carried 161 million passengers, up 6.1% from 152 million the previous year, according to figures from the Directorate General of Civil Aviation (DGCA) cited in media reports.

Air India holds roughly 26% of the market, significantly behind IndiGo’s 65%.

A more useful figure to look at is the passenger load factor (occupancy rate). In December 2024, Air India's load factor stood at nearly 85%, compared to IndiGo’s 91%. Generally, anything above 80% is considered strong for airlines.

At present, global aviation demand is soaring, particularly in Asia and the Middle East, where load factors are consistently high.

These are averages obviously, which means there are sectors where flights are constantly going full as may have been the case on the Bhopal - Delhi flight the minister referred to.

And when load factors are high and passengers are willing to pay more, relatively at least, then the airline is evidently tempted to take the money and deal with the consequences of poor inflight equipment later.

When Bad Seats Become a Business Strategy

After all, an aircraft seat is a perishable commodity—once a plane takes off, so does the revenue that could have been earned.

I asked Sanjay Lazar, a former Air India veteran who last held the position of Team Lead for Customer Relations, about the standard operating procedure (SOP) for faulty seats.

According to him, flight engineers conduct thorough checks of seats and seatbelts before an aircraft’s first flight, particularly on domestic routes, where planes may complete multiple hops in a day.

If a seat malfunction is discovered during a later flight, the crew logs the issue in a Cabin Defect Log Book, recording the seat number and nature of the defect.

In the pre-digital era, these log entries were entirely physical, with multiple copies—including one for the engineer responsible for maintenance. This manual system could mean longer delays in addressing issues.

Now, software solutions ensure that seat usability information is updated in real-time, allowing airlines to either release previously unavailable seats for sale or block defective ones before they are sold—forewarning passengers.

So, it is unlikely that such information is unavailable or not shared with all relevant teams.

Yet, based on my experience and that of many others on Air India’s international routes and apparently domestic as well, the airline has obviously and knowingly sold seats in poor condition.

Whether or not Air India’s information systems on the domestic sector are up to date, it is not the passenger’s fault if the airline is unaware of faulty seats—if indeed, they did not know.

Particularly when high fares have been paid.

Air India’s Customer Gamble: How Much Discomfort Is Too Much?

The dilemma for any business leader or revenue head in this situation is to ensure that passenger trust is not lost—or compromised—during strong demand periods by forcing a bad product on consumers, simply because they have limited choices.

Remember, most people don’t complain—either because they don’t have the time or don’t see the point.

Exactly what the minister pointed out.

Then, there is the question of percentages—how many bad seats can an airline consider an acceptable business risk?

The risk being damage to reputation and the possibility that a passenger won’t return.

Air India is clearly playing on the margins, as numerous publicly posted complaints from upset passengers indicate.

Complaining about poor service is one thing.

Suggesting that Air India’s service was better before privatisation adds insult to injury.

CORE CONVERSATIONS 

‘DIIs Decide Price’: Prime Database’s Pranav Haldea Explains Shifts In Indian Markets

In 2024, FPIs pulled out Rs 1,20,598.42 crore from India, the second worst in a decade. The FPI sell-off continued into 2025. In February, FPIs pulled out Rs 21,272 crore from Indian equities.

But here’s the interesting thing: in 2024, FPIs invested nearly the same amount of money that they withdrew from the secondary markets into India’s primary markets, purchasing IPOs worth Rs 1,20,000 crore. 

Pranav Haldea, managing director of Delhi-based Prime Database Group, during an interview with The Core Report, pointed to a similar pattern in 2023. “The same figure for 2023 was positive for both primary and secondary. So, while they (FPIs)  bought Rs 43,000 in the primary market, they also bought 1.27 lakh crores in the secondary market.” 

A Visible Shift

But what is driving the sudden interest in Indian IPOs and the sell-offs in the secondary market? 

A slew of companies looking to tap into the IPO market created an opportunity for FPIs to invest in them. 

Haldea said, “If you look at the foreign investors, while they sold heavily in the secondary market, they came in the primary market in a big way. There was tremendous liquidity last year, which is why you saw this kind of activity in the primary market.” 

The FPI interest in India’s primary markets wasn’t just towards IPOs but towards qualified institutional placements (QIPs) as well. 

What’s 2025 going to look like? 

MESSAGE FROM OUR SPONSOR

Here’s Why Over 4 Million Professionals Read Morning Brew

  • Business news explained in plain English

  • Straight facts, zero fluff, & plenty of puns

  • 100% free

CORE NUMBER

201 million tonnes

This is the total amount of coal imports recorded in India in the April-December period of FY25 which remained flat, reflecting a stagnant demand for imported coal despite a rise in domestic production, PTI reported. Imports declined by 17% in December 2024 alone, falling to 19.28 million tonnes, compared to 23.35 million tonnes in December 2023. During April-December 2024, non-coking coal imports dropped to 128.85 MT from 133.46 MT year-on-year, while coking coal imports fell to 40.64 MT in the same period. With 74% of India's power generation dependent on thermal plants, the government is prioritising domestic coal output, which rose 6.1% to 726.29 MT, signalling efforts to reduce reliance on imports.

FROM THE PERIPHERY

—📉 IT salary hikes in 2025 are set to be underwhelming, ranging between 4% and 8.5%, as per an The Economic Times report. This is lower than previous years, reflecting reduced IT spending, automation, and ongoing layoffs. In 2023 alone, over 2.12 lakh tech workers were laid off globally, with 27,000 job losses in India. The trend has continued into 2024, with leading Indian IT firms shedding 2,000-3,000 professionals. Across India Inc., salary hikes are projected at 9.2%, signalling the end of double-digit increments. Geopolitical uncertainty, economic fluctuations, and AI-driven workforce shifts are forcing companies to scale back compensation growth.

—☀️ India’s rising temperatures are set to increase default risks for 30% of agriculture and housing loans over the next five years, according to a new Boston Consulting Group (BCG) report. With 42% of India’s districts projected to experience temperature rises of up to 2°C by 2030, extreme weather events like floods and droughts are already reducing agricultural yields and household incomes—directly impacting loan repayments. Nearly half of scheduled commercial banks' credit portfolios rely on climate-sensitive sectors, making them vulnerable to financial shocks. The report also highlights a $150 billion annual climate finance gap, urging urgent investment in India’s energy transition.

—⬇️ UK study visa applications dropped 13% in the fiscal year ending January 2025, with 411,100 applications from international students, down from the previous year, according to UK Home Office data. The sharp decline, as reported by Finacial Express follows new visa rules introduced in January 2024, which prohibit students from bringing dependents, except for those in postgraduate research or government-funded programs. Indian and Nigerian students, who drove the growth between 2019 and 2023, saw their numbers plummet by 31% and 62%, respectively. Despite this, Indian nationals still received the most sponsored study visas between September 2022 and June 2024..

MESSAGE FROM OUR SPONSOR

There’s a reason 400,000 professionals read this daily.

Join The AI Report, trusted by 400,000+ professionals at Google, Microsoft, and OpenAI. Get daily insights, tools, and strategies to master practical AI skills that drive results.

✉️ Write to us here, for queries or feedback

📩 Was this email forwarded to you? Subscribe

💰 Want to sponsor this newsletter? Contact us

💰💰 Found The Core interesting? Consider supporting us

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH | ✂️ Rohini Chatterji | 🎧 Joshua Thomas