India’s domestic aviation market is predominantly a low cost carrier (LCC) market, with more than 70% market share controlled by the LCCs. Even Full-service carriers (FSC) like Jet Airways and Air India are at times forced to offer economy class seats at a fare comparable with LCCs despite providing additional facilities like meals, lounge access and frequent flyer benefits etc.
A significant number of aircrafts of Jet Airways have a full economy class configuration. India is, now, by all means an LCC territory. The market leader, IndiGo, follows a consistent strategy of on-time performance, new fleet, competitive fares and hassle free service.
With FDI reforms, enhancement of of bilateral quotas and the anticipated abolition of the infamous 5/20 rule, we are seeing more foreign airlines entering the Indian aviation space. The increasing competition is likely to enhance global connectivity, improve services, bring down fares, attract more flyers in India and boost foreign tourist arrivals.
The next phase of growth in Indian aviation is likely to come from Tier 3-4 airports. The only way to stimulate demand there is by offering good frequency and lower-than-typical LCC fares. The role of the government therefore becomes critical.
Read full report here, moneycontrol