Rule of 3 dominates skies with 80% mkt share

Published on Wed, Jul 04, 2007 at 16:51 |  Source : Moneycontrol.com

Updated at Wed, Jul 04, 2007 at 20:48  

Like this story, share it with millions of investors on M3
0
0
Share on Tumblr
Rule of 3 dominates skies with 80% mkt share

RELATED NEWS

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.

  

More on Moneycontrol

Trending News

Business News

6 ways to backup mobile data
Forget the IIP: there's free cash oozing out of every pore "Forget the IIP: there's free cash oozing out of every pore "

DLF Says Macro Environment Unfavourable W/High Comm & Labour Inflation

The latest earning numbers FIRST on CNBC-TV18
Videos

Feb 10 2012, 21:39

Tulsian buys steel stocks; negative on sugar, ADAG

- in MARKET OUTLOOK

Feb 10 2012, 21:39

Truck demand sluggish; margins down 80bps: Shriram Trans

- in Results Boardroom

Interviews

Feb 10 2012, 15:43 | Source: CNBC-TV18

Growth in margins sustainable going forward: Shasun Pharma  

Feb 10 2012, 15:35 | Source: CNBC-TV18

Expect Q4 GRMs to be similar to Q3: BPCL  

Subscribe to

Moneycontrol Newsletters

Moneycontrol.com offers you a choice of various sectoral and other newsletters for FREE!

Follow moneycontrol.com