Friday, May 10, 2019

Pricing power to give wings to low-cost airlines

New Delhi: The fortunes of low-cost airlines are set to soar, with the downfall of Jet Airways leading to consolidation in the sector and providing them much-needed pricing power. 

"We believe industry consolidation will change long-term dynamics for the better, with yields more closely reflecting cost pressure and easing earnings volatility…we expect domestic yield to improve 4-5%," UBS Global Research said in a note.

"Near-term yield trends will continue to be quite encouraging because of deceleration in capacity growth owing to Jet's shutdown, and aircraft and crew availability issues," said Edelweiss Securities.

This would be a significant departure from recent trends, when intense competition in the market had led to cost pressures on Indian airlines, resulting in wafer-thin margins.
10/05/19 Dev Kachari/Cogencis
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