Flying High: Low-cost carriers set out to conquer skies

New Delhi: Budget carriers are expanding aggressively at a time when full-service airlines are struggling to minimise losses, making many wonder whether the lessons of the recent aviation crisis sparked by excess capacity got lost on them.
Low-cost carriers such as IndiGo, SpiceJet and GoAir are expected to more than double the number of aircraft on domestic sectors to around 130 from 58 at present. The pace of their expansion — 5-8 aircraft per year individually — has raised visions of another crisis, but analysts say their plans are viable in the long run.
Independent budget carriers, which operate a quarter of the 250-odd aircraft in the domestic sector, have captured more than 35% of the market. The industry is slated to grow at 8-10% annually to around 400 aircraft by 2015, and the three low-cost carriers are expected to operate at least half of them, according to industry estimates.
The airlines are counting on the growing passenger numbers and the high economic growth. Indian economy is expected to expand at 8-9% in the next five years, which will, in turn, help the airline industry clock a growth rate of 15-17% annually. This translates into 200 million passengers by 2015. For the current fiscal, experts have forecast total passenger traffic to touch 135 million, including 85 million domestic travellers.
08/09/10 Anindya Upadhyay/Economic Times

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Categories: Low Cost General Sep 2010