The
Indian airline industry has been witnessing some drastic changes
in the last one year or so. In 2005, it was the launch of
a few low-cost airlines which fueled the competition in the
industry like never before. Some low-cost carriers like Kingfisher,
SpiceJet, and GoAir launched their fleet while some others
have lined up to join them later. In December 2005, Indian
Airlines, one of the largest air carriers and once the No.1
carrier in India, went in for an image makeover and renamed
itself as `Indian'. When it seemed that the competition was
hotting up in the Indian airline industry, Air Sahara, part
of the Sahara India Pariwar, was put up for sale, thus, signaling
the beginning of consolidation in the industry.
Air
Sahara was in the red in the recent past and this may have
forced the Sahara group to sell off its airline business.
There were two serious contenders for the deal: Jet Airways
and Kingfisher Airlines. While Vijay Mallya's Kingfisher Airlines
was looking for a partner to grab a considerable share in
the market, Jet Airways led by Naresh Goyal was in a mood
to dominate the Indian market by reviving its fortunes. (Jet,
which had a market share of nearly 45% in 2004, was left with
only 36% towards the end of 2005.) Finally, Naresh Goyal's
Jet Airways turned out to be the winner as on January 19,
2006, the company announced its deal to buy Air Sahara for
$500 mn (Rs. 2250 cr); thus, becoming the market leader in
the Indian aviation industry.
Until
the early 1990s, when economic liberalization started, government
companies dominated many sectors. Government-owned carriers
Indian Airlines, Air India, and Alliance Air ruled the aviation
sector. The political clout helped both Indian Airlines and
Air India to form their own rules in the market. It was only
after the government allowed private investment in the airline
industry that private airlines entered the industry. Once
the government opened the civil aviation sector for private
investment, there was a major transformation in the aviation
industry. This initiative by the government brought smiles
on the faces of both investors and air travelers. |
