<p>Airline industry is facing stiff competition, it even led to existing players seeking to block newer ones.<br /><br /></p>.<p>For the past couple of months, the civil aviation sector in the country has been giving some pleasant news. There is a record order for aircraft, a new airline hit the skies, one more is waiting in the wings, more passengers are flying and some operators recorded positive vibes after several quarters. <br /><br />But only months before, the annual reports of airlines recorded a cumulative loss of Rs 9,737.47 crore for 2013-14. Budget airlines IndiGo and GoAir managed to record profits though with diminished figures, compared to the previous fiscal, while the loss escalated for others. However, the aviation players were not disheartened and they looked at opportunities to turn the tide. Nobody was confident enough to say the time for gloom is over though the picture appeared a bit rosy.<br /><br />The last few moths, however, saw bitter wars, smart moves anticipating rival’s strategy, and discount sales at unexpected times for unexpected reasons. Riding on over two dozen discount sales announced by all airlines, airlines managed to attract 491.47 lakh passengers this year until September, an increase of over 34 lakh from the corresponding period last year.<br /><br /> SpiceJet, which is looking at a turnaround, initiated the discount sales in January and came up with such inventories regularly. Rivals followed suit and the Sun Group airline claimed credit for the market stimulation. SpiceJet was in the woods and the thinking in the airline was to mop up revenue. They devised a strategy to fill seats, which otherwise would go empty, and came up with the flash sales. <br /><br />Full-service providers Air India and Jet Airways were not happy at the discount sales by low-cost carriers as they were forced to match fares or lose passengers while analysts waved the red flag, saying the strategy of flash sales was financially not prudent. The revenue growth for airlines in profit was lower this year due to frequent price wars. Another problem for the existing players was the arrival of new player AirAsia, which also hit the already crowded Indian skies. <br /><br />It was not easy for budget carrier AirAsia to take off while the full service Vistara is still caught in the regulatory labyrinth seeking the final flying permit from Directorate General of Civil Aviation (DGCA) to start operations this year itself. AirAsia, which alleged a cartel was working against them, did not get a warm welcome from the fraternity as rivals used all opportunity to stall its operations. Court cases, lobbying and twitter war followed. AirAsia Global CEO Tony Fernandes tweeted in May, “Some airlines are scared of us. We must be doing something right. Help us people of India. Don't let cartels win and not let ordinary man fly”.<br /><br />As it became clear that AirAsia is there to stay, the rivals just did not lose heart or focus. Just hours before AirAsia was to open its ticket sale, SpiceJet announced huge discounts, especially on the rivals' routes. IndiGo, the sector leader with market share of over 32 per cent, announced more flights from Bengaluru where AirAsia has its hub. When AirAsia announced flights to Jaipur and Chandigarh from Bengaluru, the rivals also lost no time in increasing services to these cities. <br /><br />Vistara had plans to start operations in October, to coincide with the anniversary of J R D Tata’s iconic flight from Karachi to Mumbai on same day in 1932. Though it received delivery of two aircraft, Vistara still awaits approval. DGCA officials say they cannot rush through the procedure and the airline will have to satisfy the regulators. The new rules are also creating trouble for both DGCA and Vistara in completing the formalities. <br /><br />While others were trying to consolidate, another airline in the woods - Jet Airways - was trying to script a new chapter. It announced a three-year business plan to reshape the airline and secure its long-term future after Etihad’s investment. Desperate for a financial turnaround after consecutive losses, it is also scrapping of no-frill service Jetlite from December 1. Though not out of trouble, it reported profits for second quarter of this fiscal, a first for the airline since 2012.<br /> Challenges ahead<br /><br />“The challenges ahead are plentiful, but so are the opportunities. I am confident that the stringent measures we are putting in place will help develop Jet Airways into a market leader. The three-year plan has already resulted in demonstrable progress and Jet Airways' financial foundation is much healthier today. As we venture deeper into the turnaround, we are committed to accelerating the results,” newly appointed Jet Airways CEO Cramer Ball said last month.<br /><br />But SpiceJet, which is also looking at a turnaround, registered a Rs 310.4 crore loss in the second quarter of 2014-15. However, the airline is confident. “The branding, positioning, and perception of SpiceJet has been transformed over the course of the year, and from flying aircraft with the lowest loads (occupancy) one year ago, we are now in the position of having flown the fullest aircraft in the last 4 months,” Sanjiv Kapoor, Chief Operating Officer of SpiceJet, told Deccan Herald recently. <br /><br />The past couple of months also saw IndiGo placing the biggest order of 250 Airbus 320neo aircraft, the deal that could run into around Rs 1.54 lakh crore without discounts.<br /> With more players showing interest, aviation sector in the country is abuzz with activity. But one should not forget that only two – AirAsia India and Air Costa -- could start operations in the past five years though 16 companies got NOC from the government during this period. With low penetration, experts refused to accept that there is no space for more than four pan-India players. They believe the new aspirants should look at niche and non-metro routes to tap the untapped market. The problem with the sector in India is the high cost involved in its operations. <br /><br />At the government level, a draft policy is in. The airlines could look at easing of regulations like 5/20 rule, which makes an Indian airline to complete five years of domestic operations and have 20 aircraft to start foreign operations. One may also witness a slash in ATF taxes if the Centre proactively engages with states. With a comprehensive aviation policy expected in January, one could look forward to a recovery for the sector. </p>
<p>Airline industry is facing stiff competition, it even led to existing players seeking to block newer ones.<br /><br /></p>.<p>For the past couple of months, the civil aviation sector in the country has been giving some pleasant news. There is a record order for aircraft, a new airline hit the skies, one more is waiting in the wings, more passengers are flying and some operators recorded positive vibes after several quarters. <br /><br />But only months before, the annual reports of airlines recorded a cumulative loss of Rs 9,737.47 crore for 2013-14. Budget airlines IndiGo and GoAir managed to record profits though with diminished figures, compared to the previous fiscal, while the loss escalated for others. However, the aviation players were not disheartened and they looked at opportunities to turn the tide. Nobody was confident enough to say the time for gloom is over though the picture appeared a bit rosy.<br /><br />The last few moths, however, saw bitter wars, smart moves anticipating rival’s strategy, and discount sales at unexpected times for unexpected reasons. Riding on over two dozen discount sales announced by all airlines, airlines managed to attract 491.47 lakh passengers this year until September, an increase of over 34 lakh from the corresponding period last year.<br /><br /> SpiceJet, which is looking at a turnaround, initiated the discount sales in January and came up with such inventories regularly. Rivals followed suit and the Sun Group airline claimed credit for the market stimulation. SpiceJet was in the woods and the thinking in the airline was to mop up revenue. They devised a strategy to fill seats, which otherwise would go empty, and came up with the flash sales. <br /><br />Full-service providers Air India and Jet Airways were not happy at the discount sales by low-cost carriers as they were forced to match fares or lose passengers while analysts waved the red flag, saying the strategy of flash sales was financially not prudent. The revenue growth for airlines in profit was lower this year due to frequent price wars. Another problem for the existing players was the arrival of new player AirAsia, which also hit the already crowded Indian skies. <br /><br />It was not easy for budget carrier AirAsia to take off while the full service Vistara is still caught in the regulatory labyrinth seeking the final flying permit from Directorate General of Civil Aviation (DGCA) to start operations this year itself. AirAsia, which alleged a cartel was working against them, did not get a warm welcome from the fraternity as rivals used all opportunity to stall its operations. Court cases, lobbying and twitter war followed. AirAsia Global CEO Tony Fernandes tweeted in May, “Some airlines are scared of us. We must be doing something right. Help us people of India. Don't let cartels win and not let ordinary man fly”.<br /><br />As it became clear that AirAsia is there to stay, the rivals just did not lose heart or focus. Just hours before AirAsia was to open its ticket sale, SpiceJet announced huge discounts, especially on the rivals' routes. IndiGo, the sector leader with market share of over 32 per cent, announced more flights from Bengaluru where AirAsia has its hub. When AirAsia announced flights to Jaipur and Chandigarh from Bengaluru, the rivals also lost no time in increasing services to these cities. <br /><br />Vistara had plans to start operations in October, to coincide with the anniversary of J R D Tata’s iconic flight from Karachi to Mumbai on same day in 1932. Though it received delivery of two aircraft, Vistara still awaits approval. DGCA officials say they cannot rush through the procedure and the airline will have to satisfy the regulators. The new rules are also creating trouble for both DGCA and Vistara in completing the formalities. <br /><br />While others were trying to consolidate, another airline in the woods - Jet Airways - was trying to script a new chapter. It announced a three-year business plan to reshape the airline and secure its long-term future after Etihad’s investment. Desperate for a financial turnaround after consecutive losses, it is also scrapping of no-frill service Jetlite from December 1. Though not out of trouble, it reported profits for second quarter of this fiscal, a first for the airline since 2012.<br /> Challenges ahead<br /><br />“The challenges ahead are plentiful, but so are the opportunities. I am confident that the stringent measures we are putting in place will help develop Jet Airways into a market leader. The three-year plan has already resulted in demonstrable progress and Jet Airways' financial foundation is much healthier today. As we venture deeper into the turnaround, we are committed to accelerating the results,” newly appointed Jet Airways CEO Cramer Ball said last month.<br /><br />But SpiceJet, which is also looking at a turnaround, registered a Rs 310.4 crore loss in the second quarter of 2014-15. However, the airline is confident. “The branding, positioning, and perception of SpiceJet has been transformed over the course of the year, and from flying aircraft with the lowest loads (occupancy) one year ago, we are now in the position of having flown the fullest aircraft in the last 4 months,” Sanjiv Kapoor, Chief Operating Officer of SpiceJet, told Deccan Herald recently. <br /><br />The past couple of months also saw IndiGo placing the biggest order of 250 Airbus 320neo aircraft, the deal that could run into around Rs 1.54 lakh crore without discounts.<br /> With more players showing interest, aviation sector in the country is abuzz with activity. But one should not forget that only two – AirAsia India and Air Costa -- could start operations in the past five years though 16 companies got NOC from the government during this period. With low penetration, experts refused to accept that there is no space for more than four pan-India players. They believe the new aspirants should look at niche and non-metro routes to tap the untapped market. The problem with the sector in India is the high cost involved in its operations. <br /><br />At the government level, a draft policy is in. The airlines could look at easing of regulations like 5/20 rule, which makes an Indian airline to complete five years of domestic operations and have 20 aircraft to start foreign operations. One may also witness a slash in ATF taxes if the Centre proactively engages with states. With a comprehensive aviation policy expected in January, one could look forward to a recovery for the sector. </p>
