Abstract
The low cost airline industry has changed the definition of airlines that air
travel is a luxury and it is only for the upper segment of the population. The
key objective of low cost carriers is to increase their reach and provide the
services to a large segment. In India, low cost carriers came into existence
in 2003 when Air Deccan launched its first low cost airline and that was the
first move to open the doors of the airlines industry for middle class.
Rising GDP and increasing per capita income is positively impacting the
airlines industry. Another major driver is the booming tourism industry in
India. However, the low cost airline segment is facing challenges of
increasing competition, rising fuel prices and inadequate infrastructure.
Air Deccan is the market leader, holding the maximum share in LCC market,
followed by Jetlite, Air India Express, GoAir, and Indigo, who are making the
competition stiffer. Air Deccan enjoys the first mover advantage in terms of
access to a large number of overnight parking spaces and landing & take-off
slots during the peak period.
This report analyzes the low cost airlines market in India. It discusses the
market share of leading carriers, growth drivers and challenges being faced by
the industry. The report also profiles the major low cost carriers, with a
discussion of their key business strategies.
Key findings:
- Demand for domestic air travel is expected to increase at a CAGR of above
25% for the next five years.
- The LCCs had a combined market share of 38% in January 2007 up from 21% in
January 2006. Their market share is expected to increase to 50% by 2011.
- Four low-cost airlines together carried 9.40 million passengers during the
year 2007.
- LCCs account for almost 50% of the new aircraft orders placed. For the
past five years, low-cost airlines have been growing at more than 40% a year.
- The privately held LCCs, such as Air Sahara (now called Jet Lite following
its acquisition by Jet Airways), Air Deccan, and SpiceJet, represented 90% of
the increase in seat capacity between 2004 and 2007.
- LCCs are tying up with fast food chains and travel portals as a part of
their marketing strategy.
- LCCs are concentrating on increasing their ancillary revenues (5-7% of the
operating revenues).
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