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The Airline Market’s Problem- Us

The Indian Aviation Industry is experiencing a watershed moment. With its foremost ‘Full Service
Carrier’ Jet Airways shutting down, the company has left a huge vacuum in the aviation space. Jet
Airways, like any other Full Service Carrier around the world has its own share of struggles. Unlike its
U.S counterparts, it does not have a grip on the budget sector. The United States Aviation area is one
of the foremost sectors that the travel market relies on. Many decisions in the United States market
can have repercussions in the aviation market around the globe. The American Big Four; United,
Delta, American and Southwest are the industry’s premier choice for all travelers. Barring
Southwest, the other airlines have tested the FSC sector, as well as LCC sector of the aviation
market. According to the United States Transportation Department’s annual survey on passenger
trends, Southwest Airlines has captured the largest market share for passengers traveled 1 . The Low
Cost Model has continued to be the main mode of flying for many people across the globe as
demonstrated by the success of Indigo, Ryannair, Germanwings, etc.


The original LCC model based airline, Southwest airlines has continued to stay true to its M.O. An
upstart from the beginning, it operated during the rule of Full Service Carriers, when Pan Am and
TWA ruled the skies. It was truly a pleasure of the few. To break this stronghold, Southwest ran the
LCC model within Texas initially, which made it popular within the state. It used its small fleet to
acquire space at airports in 2 nd tier cities. By the 1980s, Southwest had emerged as a major competitor in the Airline market. Its claim to fame: low fares and no frill service.

If this sounds familiar, this is the LCC model that has been used across the world. India’s biggest
airline, Indigo operates on this model. Indigo is known for its low fares, no frills services and tight-
ship. It is currently India’s largest airline. Just remember that Indigo is barely twenty years old,
compared to its competitors like Air India and the now-defunct, Jet Airways. The current scenario is
a worrying trend in the Indian Aviation sector. Unlike any other market, the Indian market cannot
seem to reach a break-even in Full Service Carrier Service; and its starting to show. Air India is
bleeding money, and this is considering that it’s the country’s flag carrier. Air India could very well be in its way down.

Most airlines, including major carriers are subject to government subsidies and funding. This is
necessary for them to operate in a cut-throat market. The Deregulation Act of 1978 in the United
States allowed small airlines to participate, prices to be decided by the market and an open-skies
policy. The effect of this led to the creation of several airlines as well as the death of several airlines.
Many major companies which flew in the golden age of aviation died quickly. The largest losses in
the sector were Pan Am and TWA as they filed for bankruptcy at the turn of the century.
Deregulation also led to mergers by several airlines, so as to survive under a unified umbrella.

One of the biggest reasons behind the popularity of aviation is its efficiency. One can reach their
destination in half the time compared to any other conventional transport. However, the cost-to-
benefit ratio is undoubtedly, skewed. You either end up rich or just scrape by. This brings us to the
situation of Jet Airways. Ever since the rise of LCCs in India, FSCs have experienced a rude
awakening. Companies like Kingfisher, Air India, and Jet Airways have been stymied by their own
competitors with a single factor: us. As travellers, we’re guilty of searching for lower fares. We are
willing to compromise on several flights of fancy, just to get a ticket on board a jet. With the Licence
Raj long dead, the constraints on the free-market had been lifted. Air India and Jet Airways were
faced with stiff competition. While they succeeded in selling their image, Indigo and SpiceJet’s
unique blend of low-cost and safety made it a compelling bargain for the customer. Ads like “On
Time is a Wonderful Thing” took digs on the inevitable flight delays of the big two, while espousing
its dedication to what mattered most. Eventually, Indigo gained prominence for its dirt cheap fares
in the market. Initially accused of dumping and price gouging, Indigo stuck to its model and
continued to make a case for the LCC model. It opened up airways and broke Air India’s monopoly in
2 nd and 3 rd tier cities.


Naturally, Indigo got the average Indian’s attention. Soon, your average desi could fly. No longer
would airlines be the fancy of the rich.


While it is definitely good for us, it is damaging for our economy in the long run. While advocating
for government intervention is usually the end to a private entity, the Indian Aviation sector has run
into a peculiar dilemma. India’s own flag carrier, Air India has run into financial troubles, and it is
bleeding money; fast. Can economic stimulation save India’s Full Service Carriers? It’s not like the
companies haven’t tried to enter the LCC market, however they have been lackadaisical or
uninterested to combat Indigo’s growth. This has culminated directly to a monopoly-like situation.
With Jet’s loss and liquidation, the company has become an interesting case study.

One of the biggest reasons behind the popularity of aviation is its efficiency. One can reach their
destination in half the time compared to any other conventional transport. However, the cost-to-
benefit ratio is undoubtedly, skewed. You either end up rich or just scrape by. This brings us to the
situation of Jet Airways. Ever since the rise of LCCs in India, FSCs have experienced a rude
awakening. Companies like Kingfisher, Air India, and Jet Airways have been stymied by their own
competitors with a single factor: us. As travellers, we’re guilty of searching for lower fares. We are
willing to compromise on several flights of fancy, just to get a ticket on board a jet. With the Licence
Raj long dead, the constraints on the free-market had been lifted. Air India and Jet Airways were
faced with stiff competition. While they succeeded in selling their image, Indigo and SpiceJet’s
unique blend of low-cost and safety made it a compelling bargain for the customer. Ads like “On
Time is a Wonderful Thing” took digs on the inevitable flight delays of the big two, while espousing
its dedication to what mattered most. Eventually, Indigo gained prominence for its dirt cheap fares
in the market. Initially accused of dumping and price gouging, Indigo stuck to its model and
continued to make a case for the LCC model. It opened up airways and broke Air India’s monopoly in
2 nd and 3 rd tier cities.


Naturally, Indigo got the average Indian’s attention. Soon, your average desi could fly. No longer
would airlines be the fancy of the rich.


While it is definitely good for us, it is damaging for our economy in the long run. While advocating
for government intervention is usually the end to a private entity, the Indian Aviation sector has run
into a peculiar dilemma. India’s own flag carrier, Air India has run into financial troubles, and it is
bleeding money; fast. Can economic stimulation save India’s Full Service Carriers? It’s not like the
companies haven’t tried to enter the LCC market, however they have been lackadaisical or
uninterested to combat Indigo’s growth. This has culminated directly to a monopoly-like situation.
With Jet’s loss and liquidation, the company has become an interesting case study.

With Vistara being the only FSC around apart from the State owned Air India, could this be the Indian aviation sector’s moment of reckoning? A stronghold by any company on the Indian market could have disastrous consequences for us. It could manifest itself in price gouging, monopolization, etc. in the aviation sector. Could our love for cheap fares be costing us down the line?      -RC 

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