Saturday, May 19, 2007

Low-cost Airlines and aviation industry in India..

India has at present four private low cost airlines Air Deccan, Spicejet, Indigo and GoAir and Air India Express, from the Indian stable, which runs low cost flights also out of the coutry. Out of the total 32 million passengers who travelled by air last year, one third, almost 9.4 million travelled by low cost airlines. I do not know what is this proportion in other countries. The pioneers in low cost airlines is the United Airlines of US.

Air Deccan continues to be the leader notching almost 61 percent of this market. Air Deccan and it's founder Capt. Gopinath still seem to keep it's focus hard on catering to the economy class passengers or the middle class of the country and also the first-timers. Eventhough the Railways is giving them a good run for their money by reducing the first class fares in Railways, people seem to prefer air over rail considering the time factor. ( even then the railways is making huge profits with better passenger, freight and infrastructure management. Last year Railways profits of rs. 20,000 crores or US $ 4 billion is a historical first for any public utility in the world bringing laurels to the Indian Railways and it's key man-in-charge Lalu Prasad Yadav. We even had top business universities with their profs and students queueing up outside the Railway Bhavan in New Delhi to have an audience with Lalu)

Eventhough low cost airlines is doing well regarding numbers, it is not so rosy a picture regarding their bottomline. The private low cost airlines together made a loss of Rs. 320 crores last year, while the govt sector Indian made a profit of Rs 20 crores.

A shakeout is imminent in the low cost airlines market, even though new players from the South are waiting to enter the market very soon.

Recently the biggest aeroplane, the 880 passenger capacity A 380 was in New Delhi and Mumbai, courtesy Kingfisher Airlines. The aviation market is still upbeat about the potential of this sector of the economy, considering the pending orders worth hundrds of billions of dollars with Boeing and Airbus.

Rosy picture ahead for this sector..


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