CAPA stresses need for consolidation in airline sector

Mumbai, June 13 (UNI) The Centre for Asia Pacific Aviation (CAPA) today stressed the need for greater consolidation in Indian airline sector, saying it is extremely difficult for the market to absorb many new entrants.

Nearly 14 new airlines are awaiting government approval to launch operations. They include Easy Air, Trans India and Star Air.

The government, meanwhile, is encouraging regional connectivity.

''With seat capacity over-concentrated on trunk routes, massive amounts of new seats coming online has led to an extremely vulnerable industry, with carrier viability a very sensitive issue,'' said Mr Kapil Kaul, CAPA's chief executive officer for Indian subcontinent and west Asia region.

''The solution is for greater consolidation which is expected to continue in the form of strategic alliances and closures.'' The entry of Air India Express and JetLite in domestic market is expected to have a significant impact, he said.

The fundamentally strong shape of Indian economy has fuelled continuing growth of airline sector with six new aircraft entering the national fleet every month for the past two years. ''The sustainability of these increases is questionable,'' said Mr Kaul.

The consolidation in airline industry has picked up momentum in the past six to eight months. But the coming period will see more of the same through a combination of strategic alliances, possible market exits and the buy-in of the country's three largest carriers into smaller participants.

With Air India Express and JetLite (formerly Air Sahara) adding new domestic low cost capacity, the need for consolidation -- especially among low cost carrier (LCC) sector -- is very high.

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