Rule of 3 dominates skies with 80% mkt share

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It could soon be the rule of 3 again! With 80 % market share under their wings, 3 airlines are dominating the skies. These airlines will change the dynamics of Indian aviation reports CNBC-TV18.

 

This time around the battle in the Indian skies seems to be for profitability! The three major airline groups- Jet and Jet lite, Kingfisher with Deccan and Air India and Indian combine seem focussed on bouncing back into the black. With over 80% of the market under their fold - the task may be simpler. The three could dominate the fare structures in the market- experts say come October and fares could go up by 10-15% and may be a tad more on the metro routes.

 

For Instance a Mumbai-Delhi ticket on an average costs about Rs 2500 on a low cost airline- Ideally a Rs 3500 ticket would cover the cost for the airline. Similarly a Delhi-Bangalore ticket that currently sells at Rs 3500 rupees should ideally be Rs 5000 on an average.

 

But achieving this is a long haul and a complex one that involves moving some flights from overcrowded routes to less serviced ones. In the bargain, fares on some non-metro routes are expected to come down. That's because this consolidation will mean that full service airlines like Jet and Kingfisher will rationalize routes of their low cost arms Jetlite and Deccan so as to avoid any cannibalization.

 

"I understand jet has already cutting on the Delhi-Calcutta route and deploying in places like Ranchi and Patna and there is a sensible realisation, then why get them to compete - there is sensible rationalisation. So you would primarily see sensible rationalisation of capacity" adds Kapil Kaul, CEO, CAPA.

 

Experts say that consolidation in the Indian aviation Industry happened faster than in most other countries. But consolidation may not yield immediate results unless the big 3 bring back price sanity in the market. And experts say it will take at least a year and a half before the sector turns profitable.