Few months backs "Consolidation" was the buzzword in the in the Aviation industry. During that time Air India and Indian Airlines merged , Jet Airways and Sahara airlines merged resulting in creation of 3 major players in the Indian aviation space, Indian , Kingfisher and Jet Airways.
The recent news of collaboration between Jet and Kingfisher comes as a surprise for me.
Altough the deal does not involve any equity sharing but still Jet-Kingfisher combined will capture the 60% of the market share.
This deal is a result more of necessity than choice, with the rising overhead costs it was imperative on the airline companies to cut cost. The resulting deal will result in rationalisation of routes for both the airlines, reduction of excess staff and overall better profitability by sharing of similar costs and and may be revenue sharing
The only point to note here is that it may now perhaps mean the end of a low cost carrier model. With such a dominance force in the aviation industry the Jet-Kingfisher combined would not try to push into this model instead could now dictate the way the business is and should be carried.
Well as I had already stated in one of my earlier blogs, that the dream of the Indian middle class to fly has to be remain a dream for some more time now.
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