With India set to welcome at least two new airlines this year, the country's turbulent aviation sector may be on the brink of a bitter war that will ultimately result in consolidation over the next two years, say analysts.
India's aviation sector, whilst promising huge growth potential due to the country's growing middle class and low air travel penetration rates, presents a tougher operating environment than most other markets. From intense price competition to exorbitant operating costs owing to high airport and fuel taxes, carriers have been locked in a tenacious battle for survival, with budget operator IndiGo the country's only profitable airline.
Now, the entrance of two new players – Singapore Airlines' (SIA) full-service airline joint venture with Tata Group and AirAsia's low-cost carrier joint venture also with the Indian conglomerate – both of which are expected to start flying later this year, is set to further turn up the heat on competition.
"We expect a full-fledged war in the winter of 2014 with the arrival of new players, presuming they get their operator permits by then," Amber Dubey, partner and head, Aerospace and Defense at global consultancy KPMG told CNBC.
07/02/14 Ansuya Harjani/CNBC
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India's aviation sector, whilst promising huge growth potential due to the country's growing middle class and low air travel penetration rates, presents a tougher operating environment than most other markets. From intense price competition to exorbitant operating costs owing to high airport and fuel taxes, carriers have been locked in a tenacious battle for survival, with budget operator IndiGo the country's only profitable airline.
Now, the entrance of two new players – Singapore Airlines' (SIA) full-service airline joint venture with Tata Group and AirAsia's low-cost carrier joint venture also with the Indian conglomerate – both of which are expected to start flying later this year, is set to further turn up the heat on competition.
"We expect a full-fledged war in the winter of 2014 with the arrival of new players, presuming they get their operator permits by then," Amber Dubey, partner and head, Aerospace and Defense at global consultancy KPMG told CNBC.
07/02/14 Ansuya Harjani/CNBC
