Airlines should spread wings to non-metros to stay afloat

The decade of 2010 began on a positive note for the airline sector but ended on a sour note. The opening up of the economy and regulatory easing in early 2000 led to the era of high economic growth. This resulted in higher income levels, a burgeoning middle class and attracted the new breed of low-cost / hybrid carriers to the Indian market. Low-cost carriers (LCCs) were able to bring high-income rail travellers to air mode and were also able to cannibalize into the market of full-service carriers.
During 2004-07, everyone in India was bullish and low per capita matrix in every sector made every entrepreneur make over-optimistic estimates of the vast market, backed by anticipated high economic growth. One thing they missed out was the difference between the vast market and the addressable target market. Many entrepreneurs who got drawn into airlines business got in due to the low entry barriers but got trapped as the exit barriers are high. This happened in the mid-1990s too, when Archana Airways, Modiluft, Damania, East West and NEPC realized that they were ahead of the times and targeted wrong segments.
27/05/12 Sushi Shyamal/Times of India

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Categories: Indian Aviation- In General May 2012