Sunday, February 27, 2022

Will IndiGo Lose Out To Akasa Or Tata Air India?

Indian aviation is adding some new players. The newly privatized Air India and low-cost Akasa Air are both hoping to shake up the market, putting the existing players under pressure. So how will India's largest airline, IndiGo, handle the new challenges?

India is a price-sensitive market dominated by budget carriers. IndiGo has ridden this wave of booming traffic and cemented itself as the top by a long shot. However, the carrier also benefited from the absence of a large full-service carrier or budget alternatives.

Now, the airline could be facing a challenge from both of those. Tata Air India has already forced some changes out of the budget giant in a bid to remain competitive. With service standards set to turn around at the flag carrier, IndiGo is planning to offer more passenger amenities to prevent too many passengers pulling away.

The changes at Air India may also adversely impact IndiGo's wide-ranging international expansion. If passengers actively seek out the former, which is possible on international flights, the low-cost airline could see its market share hurt.

However, IndiGo will almost certainly retain the lower price point for years to come, ensuring that it is not in dire straits by a resurgent Air India.

When it comes to Akasa Air, the airline has a longer path to becoming a major challenger. With three major low-cost airlines in India, Akasa will need time to establish itself, add routes and aircraft to the network. This means it will be a while before it manages to take over a significant chunk of the market.

However, IndiGo will be eying Akasa during its early years. The airline has poached several of its employees to head up operations and placed a substantial order for 72 737 MAXs. With the first delivery less than two months away, Akasa will make the Indian market even more competitive.

As of January, IndiGo had a market share of 55.5%, far greater than its share at the start of the pandemic. As two new entrants join the market, we can expect to see the leader's share to decrease slightly. However, a significant shift will only be possible once Akasa has a large fleet and Tata merges all of its subsidiary airlines.

27/02/22 Pranjal Pande/Simple Flying

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