With Air Sahara, Jet gets a big lead over Kingfisher in terms of infrastructure, time slots, route network and market share.
BANGALORE: Not long ago, when evaluation the aviation sector, an analyst had said, “We need some players to die for rationality to return to the sector.” He was serious.
Well, the death hasn’t occurred but a weak airline has nearly been gobbled by a stronger one, albeit at a high cost.
Will this herald rationality, though? Industry observers think so, but only in the full-service carriers space. The chaos in the low-cost, no-frills segment is expected to continue.
Amar Kedia of ICICI Securities said some consolidation is due with the impending exit of Air Sahara.
“We would now have three players in the full-service segment - Jet, Kingfisher and Indian. Sahara was offering huge discounts but once it fuses with Jet, it would also command a premium. That way, we could expect some rationalisation in pricing,” Kedia said.
Another analyst, who did not wish to be named, said he expects the ‘triopoly’ to come to an informal understanding on yields - and by default pricing.
The refrain among analysts is that the full-service space is out of bounds for new entrants.
“After Indus Airways’ early demise (the carrier suspended operations in three months), we don’t expect new players to enter the aviation sector for some time. This means existing players will consolidate their position in the growing market,” said an analyst with an international broking house.
One airline that would be deeply impacted by the imminent coming together of Jet-Sahara is Kingfisher.
The Vijay Mallya-owned airline has been giving some serious competition to Jet.
With Air Sahara, Jet gets a big lead over Kingfisher in terms of infrastructure, time slots, route network and market share.
If Kingfisher Airlines is nervous about Jet’s strengthened muscles, it is not showing.
Manoj Chacko, general manager - sales, of Kingfisher felt it is a little early to comment on the impact.
“As for consolidation, there was capacity in the market and that remains where it is. Also, since we (Sahara, Jet and Kingfisher) are operating at different price points, I don’t see things changing too much. Everything will depend on what strategy Jet adopts,” Chacko said.
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