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Good time to be a frequent flyer

Competition in the aviation sector is spurring growth and this is good news for the consumers. As the airfare warfare intensifies, with dramatic slashing of fares by major players like SpiceJet, IndiGo, even the middle-classes can hope to travel by air, and not depend on railways for last minute bookings. With FDI norms in aviation now relaxed, and up to 49 per cent foreign investment allowed in stakes, a commendable feat pulled off by the UPA-II government during the stormy parliamentary sessions in September last year, the ailing industry can now recover its sagging fortunes, as international investors start waking up to the changed and favourable realities. Already, proposal for a huge joint venture between the Malaysian no-frills carrier Air Asia, Asia’s largest low-cost airline fleet, and the Tata Group, has been floated, which has a good chance to see the light of the day, despite having some obvious short-term challenges because of the hiked fuel prices and other ambient blocks still bogging down the Indian aviation scene. Nevertheless, the new combined airline can spruce up the low cost travel model currently offered by players like IndiGo, SpiceJet or GoAir, which rely on factors like low airport surcharges, auxiliary revenues and maximum fleet utilisation.

This might also signal a positive direction for the Jet-Etihad airline deal, which has run into troubled waters and is currently sorting out the differences between the respective managements. Etihad, which is a flagship carrier of the United Arab Emirates, is interested in hiking its share up to 49 per cent, and Jet Airways is likely to benefit from that big an investment from the Abu Dhabi-based airline. The currently grounded Kingfisher Airlines can also take advantage of the indulgent aviation environment and find a foreign suitor to be back in business. Low cost flying in India has immense potential to expand further, and can come as a big relief for the first time and middle-class flyers, who can now upgrade to air travel for both business and leisure. Airport taxes can also be brought under control by judiciously exploiting these sites for commercialisation, thus incentivising low cost air travel for more people.
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