Sunday, October 16, 2016

Advent of foreign low-cost airlines

Though India’s airline industry started well before Independence, it remained accessible only to the well-off, mostly because of high ticket cost. The advent of low-cost carriers in early 2000s opened the sky for masses but international air travel was still out of bounds for them with complete dependency on full-service airlines.
It was in 2007 that foreign low-cost carriers started taking interest in India to operate international flights. Around June that year, several Asian low-cost carriers received or applied for permission to fly to India.
Airlines such as Tiger Air (a joint venture between Temasek Holdings and Singapore Airlines), Malaysia’s AirAsia and Saudi Arabia’s Sama Airways, Thailand-based private carrier Nok Air, Indonesia’s Lion Air, United Arab Emirates’ Ras Al Khaima (RAK) Airlines were jockeying for Indian market share.
According to Harsh Vardhan, an aviation expert and former managing director of state-run airline Vayudoot, situation in the aviation sector globally started changing after terror attacks on 11 September 2001 in the US. Investors shied away from putting in money in the US and European markets. The gainers were the Asian markets.
In June 2007, Tiger Air received permission to fly to six Indian cities—Chennai, Kozhikode, Trivandrum, Goa, Cochin and Kolkata. A month later, Nok Air started daily flights from Bangalore to Bangkok. There was a fare war with Nok Air offering Rs.10,000 return fare, which was almost 40% cheaper than that being offered others.
At the same time, Sharjah-based RAK Airways started operating international flights from 10 international airports. However, it shut down in January 2014 over air services agreement requirements and additional traffic rights to India. Meanwhile, Air Asia, founded by Tony Fernandes, also joined the low-cost bandwagon by starting low-cost domestic operation in India and flying from Kolkata to Malaysia.
16/10/16 Sanjay Singh/VCCircle
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