AI-Indian merger will lead to further consolidation: FICCI-CAPA

By Staff
|
Google Oneindia News

New Delhi, Feb 14: The merger of government-owned Air India (AI) and Indian scheduled for approval by March 31 will set the ball rolling for further consolidation in the industry, according to a new study.

''The industry will consolidate through a process of closure or mergers and acquisitions to around two to three full service carriers, three to four large national low cost carriers and three to four niche regional operators,'' said the report titled Indian Aviation: Overview and Outlook.

Both Jet Airways and Kingfisher Airlines are likely to be keen to grow via the acquisition route to expand their market presence, subject to an appropriate strategic fit, it said.

Meanwhile, SpiceJet which now has the support of investors of the calibre of Tata group and Istithmar may also be considering this option, said the study by Federation of Indian Chambers of Commerce and Industry (FICCI) and Centre for Asia Pacific Aviation (CAPA).

It also said the domestic market's size is expected to cross 60 million and international traffic 40 million by the end of 2010.

Indian carriers have about 480 aircraft on order for delivery through to around 2012, as against a fleet of 310 aircraft currently operating in the country. Over the next 12 months, Kingfisher Airlines is expected to be the most aggressive in terms of fleet induction. Despite bullish growth projections for India, overseas experience suggests that it is extremely difficult for a market to absorb so many new entrants. ''This is compounded by the fact that airline management in some cases is relatively inexperienced and untested,'' the study said.

The research projected that domestic traffic will grow at 25 to 30 per cent a year and the international traffic growth at 15 per cent until 2010.

Low cost carriers which currently have a market share of 35 per cent based on data for November 2006, up from zero per cent in August 2003, will reach a market share of 70 per cent by 2010.

The study said Jet Airways and Kingfisher Airlines appeared to be stabilising their load factors at around 70 per cent. However, Indian and Air Sahara are struggling at a significantly lower 60 per cent.

India will require an additional 2,000 pilots by 2010, a requirement that cannot be met by locally trained resources alone, it said.

UNI

For Daily Alerts
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
X