Airfares are likely to be impacted after airlines like Akasa and Jet Airways 2.0 introduce fleet early next year, but the aviation market will only be disrupted after two to three years when these airlines scale up their operations, experts said.
After roughing it out for nearly two years due to the COVID-19 pandemic, India’s aviation industry is set to take off in 2022 with the introduction of a new airlines Akasa and the return of Jet Airways in the domestic market. The country’s flagship Air India under Tata Sons is also likely to be a major player in the long-haul market.
The entry of SNV Aviation and Jet Airways in a market where operating margins are thin because of government-mandated minimum ticket prices and excess fleet will lead to “margin erosion for strong and weak airlines alike,” Gulf News quoted Satyendra Pandey, managing partner of aviation advisory firm AT-TV, as saying.
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SNV Aviation is the parent firm of ultra-low-cost airline Akasa which is backed by billionaire Rakesh Jhunjhunwala. Akasa plans to launch operations in the summer of 2022. Meanwhile, Jet Airways is emerging out of restructuring after being acquired by the UAE-based Jalan-Kalrock consortium. The airline is likely to launch flights by early next year.
Akasa has placed an order for 72 Boeing planes for $9 billion, whereas Jet 2.0 plans to induct 50 aircraft over the next three years.
“They all chase - or plan to chase - the same market, the same demand, with similar fleets and similar networks. A price war is certain,” Pandey told Gulf News.
Travellers will benefit from the entry of new players as they will get more options, Nishant Pitti, CEO of EaseMyTrip.com, said. “The market will become more dynamic in terms of prices and offers that will further help in reaching the pre-pandemic level quickly," Mint quoted Pitti as saying.
However, some experts feel the entry of Akasa and Jet Airways may impact airfares in certain sectors in the short term. According to aviation consultancy Capa India, Akasa will disrupt the market when it reaches scale and achieves a competitive cost base in fiscal 2025.
(Edited by : Thomas Abraham)
First Published: IST