Indian aviation market facing very tough competition; cost environment unfavourable
Date: June 10,2019
Time: 1
SocialTwist Tell-a-Friend
Print Print

Indian aviation market facing very tough competition; cost environment unfavourable

Indian aviation market facing very tough competition; cost environment unfavourable

Seoul-Indian airlines are facing tough competition and the cost environment too is not in their favour, Alexandre de Juniac, Director General & CEO, IATA said, amid more than 25-year-old Jet Airways shuttering operations. India was one of the fastest growing domestic aviation markets in the world but growth turned negative in April mainly on account of Jet Airways crisis.

To a query on what could have gone wrong for Jet Airways, de Juniac said, in India full service airlines are facing some difficulties while low cost carriers are doing a little better. Currently, India has two operational full service carriers Air India and Vistara. The latter expects to start international operations in the second half of 2019.

Speaking on the sidelines of the recently concluded annual general meeting, de Juniac said high costs, adverse conditions such as fluctuation in rupee against the US dollar and strong competition were putting pressure on the profitability of airlines. The International Air Transport Association (IATA) is a grouping of nearly 290 airlines. Jet Airways, Air India, SpiceJet and Vistara are among the members.

About Jet Airways, which was a strong and contributing member of IATA, de Juniac said the airline's grounding was a pity and also reflects tough competition in the sector. "It tells us that the Indian market is tough due to macroeconomic conditions, the rupee, the oil prices and more generally the costs. These are putting pressure on the profitability of Indian members and it is a market where the competition is very tough," he told PTI in an interview.

Jet Airways, which had a significant number of domestic and international flights, temporarily suspended operations in April after it ran out of cash. To a query on whether the tough situation for airlines has also to do with their business models, the IATA chief replied in the affirmative but did not elaborate. Noting that cost environment is not very favourable for airlines in India, de Juniac said prospects for the airlines' industry are less positive than six months ago. "It is a global trend, which is more accurate and visible for cargo than for passengers. We still see a strong demand in the passenger business," he added.

When asked whether country's largest carrier IndiGo would be joining IATA, de Juniac said the airline is more than welcome and expressed hope that one day it would join the grouping. Officials of IndiGo, which has nearly 50 per cent domestic market share, were present at the annual general meeting as the airline was extended a special invite.

Latest Jobs View More...