Struggle to keep up with Big 3

With three mergers in less than six months giving more than 80% of the domestic passenger market to the new Big Three of India’s commercial airlines industry, the Little Four are scrambling to find ways to pull through tough market conditions. And, the route finding favour: talking mergers.
One small carrier that has hit a bit of an air pocket is GoAir Ltd, an airline started by textiles major Bombay Dyeing. The Mumbai-based carrier, which has had to trim the number of planes in its fleet and the routes it flies, is losing about Rs20 crore every month, according to a former senior executive who preferred not to be named.
Meanwhile, GoAir’s managing director Jeh Wadia, who wouldn’t confirm the loss figures, says he has appointed an investment bank—Morgan Stanley’s India unit—to vet investment proposals.
The strongest candidate among the Little Four with big ambitions to acquire scale—and, with seemingly deep pockets to match—is Chennai-based Paramount Airways Ltd, also backed by a family with a textiles background. SpiceJet and IndiGo make up the Little Four.
Paramount is also being forced to look at other options, such as a majority stake in SpiceJet Ltd, another low cost carrier. But SpiceJet too denies it is in sale or merger talks with Paramount or any other domestic airline. Meanwhile, Paramount isn’t alone in eyeing SpiceJet, which has 8.2% marketshare, or about the same as Air Sahara that was acquired by Jet Airways (India)Ltd.
20/06/07 Tarun Shukla/Livemint

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Categories: General Aviation Jun 2007