Low-cost airlines may join hands

New Delhi: The unprecedented alliance formed by heavyweights Jet Airways and Kingfisher has forced low-cost airlines to plan an alliance of their
own. IndiGo, SpiceJet and GoAir are looking at pooling of resources on a similar pattern as the Jet-Kingfisher alliance, industry sources close to the development said. The brass of these airlines feel that this is the right time to re-emphasise the budget carrier model and expand their market share to take on competition from the formidable Jet-Kingfisher combine which has close to 60% market share.
Forming an alliance could also protect low-cost players, who are smaller in size, from being gobbled up by the giant alliance. In the past, both Kingfisher and Jet had shown interest in acquiring compa-nies like SpiceJet. The Wadia family-owned GoAir has also been in the eye of take-over speculation as a consolidation wave was seen result-ing from the huge losses piled by the industry due to high fuel prices and growing input costs.
Discussions are at an initial stage and low-cost players are evaluating the situation, sources close to the development said. While there was no official confirmation, the sources said the current situation leaves budget carriers vulnerable to enhanced competition as Jet and King-fisher could now shift focus to taking on the smaller players rather than fighting each other.
15/10/08 Ganapathy Subramaniam/Economic Times

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Categories: Indian Aviation- In General Oct 2008, Low Cost General Oct 2008