India’s budget airlines leave rivals in vapour stream

Chief Regulatory Officer at CSE Renuke Wijayawardhane presenting the listing certificate to Executive Chairperson at Renuka Hotels Shibani Thambiayah

MUMBAI, September 6, 2009 (AFP) – India’s low-cost airlines are set to go from strength to strength as they grab market share from ailing premier carriers such as Air India, whose debts and losses continue to pile up, experts say. Big airlines such as Jet Airways, Kingfisher and Air India are being hit by falling revenues due to tough economic conditions and high air fuel taxes.

The smaller, “no-frills” carriers such as Spicejet or Indigo, set up to open up the skies to the country’s burgeoning middle classes, have dealt better with the turbulent business conditions of the last year, analysts say.

At least seven budget airlines fly across India’s skies, with a 40-percent market share.

“By December-end, we estimate this to rise to 70 percent,” said Kapil Kaul, South Asia chief executive of the Centre for Asia Pacific Aviation (CAPA) consultancy.

A sign of the predicament facing India’s private airlines — which carry 80 percent of local air traffic — was seen last month when bosses threatened to ground planes for a day unless the government gave them a bailout.

The demand was denied but a strike was averted when the government promised to take steps to reduce the burden of steep fuel taxes.