Air Deccan entered Indian airline industry
in 2003. With its low pricing strategy, it was positioned
as leader in Low Cost Carriers (LCC) segment. In May 2007,
Air Deccan became Deccan with the acquisition of its 46%
stake by Vijay Mallya. The new Vice-Chairman of Deccan
Aviation, rebranded Deccan as Kingfisher Red on August
30, 2008. The new brand will be enthused up the value chain
with additional services.
The Indian aviation industry is a small
part of the country's overall travel industry. It is dominated
by small number of large firms that differentiate their
offerings on the basis of frills and quality of service.
Since 1993, the aviation industry has remained highly competitive
with soaring growth rate (see Exhibit 1). The primary reason
for greater demand for airlines is the increasing disposable
income of consumers and increased spending on leisure and
holidays. It is expected that the aviation market will
reach 86.1 million passengers by 2010, from 32.2 million
passengers in 2007. With changes in the regulatory and
FDI measures, a number of players started operating on
domestic routes in a short period of time which intensified
competition in LCC segment and gave rise to price competition
among full-service providers. Most of the players operate
on domestic routes, with few covering international routes.
The major challenge of the Indian aviation industry is
the infrastructure and tax policy measures which are not
in tune with the growth pace of the industry.
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