Key Points
Despite more than 60% market share, which would ideally give a player pricing power in any other industry, revenue managers at Indias largest airline may soon be forced to reduce their base fare to match competition, or lose customers to rivals...
Competition is a constant in the airline business. If prices in markets get high, another airline swoops in, sensing opportunity. Consolidation in the Indian aviation market, which has seen the closure of three airlines in the last decade and multiple mergers havent accrued any benefit to the industry, experts said...
Capacity induction by big players like IndiGo and Air India is likely to be three times of GDP growth which will undo the benefits of consolidation, aviation research firm CAPA said.. With the induction of so many new aircraft, airlines have to find new routes where they often find that even a difference of Rs 200 makes the passenger opt for a train rather than a flight...
So, unless you keep stimulating the market with reasonable fares, airlines will never be able to make a passenger choose air over rail, said an IndiGo executive which operates over 520 routes and many of those between cities where rail and road connectivity is strong...
Air India CEO Campbell Wilson said that prices of tickets beyond 15 days of travel are loss making for an airline while airlines try to make up for that by increasing fares closer to date of travel..
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