New Delhi: Now that budget carrier SpiceJet is on its way to recovery, and Tata-Singapore Airlines (SIA) is ready for a take-off in the first week of January, 2015 could start with fierce competition kicking in into the sector with every carrier trying to woo flyers in the expanding market.
And with many more airlines waiting in the wings to launch their services in the current year, the expansion in the sector will only benefit flyers as it will drive down fares with higher supply of seat inventory. As seen in the past, will this splash red on the books of the airline operators?
Captain G R Gopinathan, pioneer of low fare aviation in India, does not think so. Citing examples, he said UK's Ryan Air, which entered a mature market more than a decade back, has been profitable ever since it was launched.
"It (profitability of Ryan) is not a flash in a pan. If you look closely, most airlines with lowest fare generally have a higher profit while those with highest fare have a hard time keeping the red off their balance sheet," he said.
According to him, today, Ryan flies 80 million passengers, out of which 20 million passengers pay a fare of just euro 1 plus taxes. Its revenue per passenger at euro 39 is among the lowest but it has one of the highest profits among the airlines in the world. In contrast, British Airways's revenue per passenger is Euro 250 but it has to struggles to remain in profit.
22/12/14 Praveena Sharma/Daily News & Analysis
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And with many more airlines waiting in the wings to launch their services in the current year, the expansion in the sector will only benefit flyers as it will drive down fares with higher supply of seat inventory. As seen in the past, will this splash red on the books of the airline operators?
Captain G R Gopinathan, pioneer of low fare aviation in India, does not think so. Citing examples, he said UK's Ryan Air, which entered a mature market more than a decade back, has been profitable ever since it was launched.
"It (profitability of Ryan) is not a flash in a pan. If you look closely, most airlines with lowest fare generally have a higher profit while those with highest fare have a hard time keeping the red off their balance sheet," he said.
According to him, today, Ryan flies 80 million passengers, out of which 20 million passengers pay a fare of just euro 1 plus taxes. Its revenue per passenger at euro 39 is among the lowest but it has one of the highest profits among the airlines in the world. In contrast, British Airways's revenue per passenger is Euro 250 but it has to struggles to remain in profit.
22/12/14 Praveena Sharma/Daily News & Analysis
