Tuesday, August 28, 2018

How cheap flight tickets are killing airlines in India’s cutthroat aviation market

Global carriers have flocked to India, lured by a domestic travel boom and what’s expected to be the world’s third-biggest aviation market by 2025. Yet India has proven an intensely competitive market, where profits are scarce and the life expectancy of weaker airlines is anything but certain.

Jet Airways India Ltd., one of the first carriers to launch after the market opened up in the early 1990s, said in a filing this month that it needs cash to meet liquidity requirements. Its stock price is in a free-fall as losses piled up. The company’s board announced a turnaround plan Monday with scant details, including the sale of its stake in its loyalty program and reduction of 20 billion rupees ($285 million) in costs over two years.

It’s the latest sign of financial distress in a market beset by a crushing fare war that’s made life difficult for foreign carriers, ranging from Malaysia’s low-cost AirAsia Group Bhd. to Singapore Airlines Ltd., not to mention a teeming field of domestic players. The competition is set to intensify if Qatar Airways follows through with its proposal to start a short-haul airline in the country.
28/08/18 Bloomberg