PM Narendra Modi has sought Tata\u2019s help to rescue the struggling airline, people familiar with the matter told Anurag Kotoky and Bhuma Shrivastava of Bloomberg News this week. The conglomerate\u2019s board would want state banks and India\u2019sairports to take a haircut on some of Jet\u2019s commitments to them before going ahead, one of the people said.<\/p>\n
That caution overthis bout of national serviceis hardly surprising. Jet has built up a substantial position in India\u2019s domestic aviation market:It\u2019sthe biggest full-service carrier and the largest outright after the terrifyingly dominant budget carrier Interglobe Aviation Ltd., better known asIndiGo. Still,the smaller positions that Tata hasstaked out in joint ventures with Singapore Airlines Ltd. and AirAsia Bhd. are a much more sensible way of taking on the challenges of making money from getting India airborne.<\/p>\n
Etihad thought its bottomless pockets would be enough to offset those problems and give it a toe-hold in one of the world\u2019s fastest-growing markets. The bet turned out to be as bad as its other purchases of stakes in struggling airlines, and may yet result in a stricken Etihad in turn being swallowed up by its rivalrous compatriot Emirates.<\/p>\n
The main problem for the country\u2019s aviation sector is that it\u2019s sandwiched between a profitable and ebullient budget carrier with a market share north of 40percent \u2013IndiGo and a perennially loss-making but still substantial state-owned airline, Air India Ltd.<\/p>\n
Squeezed from both sides, the industry suffers such strong downward pressure on ticket prices that even a rate of passenger growth that\u2019soutstripping the capacity of India\u2019s domestic aircraft hasn\u2019t been enough to drive up average fares.<\/p>\n
It\u2019s a very bad idea for a full-service carrier ever to engage in a price war with a budget airline, given that it must hand out free food and drinks and generally treat its passengers like human beings. But that\u2019s more or less what Jet has been doing against IndiGo and SpiceJet for the best part of five years. No wonder its revenue is hardly ever enough to cover costs.<\/p>\n
The approach of Tata\u2019s existing aviation ventures its fancy Vistara operation with Singapore Airlines and the cheap and cheerful AirAsia India \u2013has been to carve out relatively niche positions with ties to international carriers. Put together, these two have less than 10 percent of the market, compared withmore than 15 percent for Jet and its tiny Jet Lite budget carrier.<\/p>\n
That\u2019s not going to be enough, though. India\u2019s aviation market has been struggling for years, and Jet is in a singularly difficult position to make money. All but a handful of routes are short-haul, and the low-income marginal customer isn\u2019t very inclined to pay extra for 90 minutes of pampering, so budget carriers have a built-inadvantage.<\/p>\n
The passengers who are prepared to pay for full-service quality typically find that Jetis a bit better than the cancellation-prone, complaint-heavy Air India, but not quite enough to commanda consistent premium.<\/p>\n
Right now, India\u2019s aviation market resembles that of the US from the 1980s to the 2000s. There aretoo many carriers fighting for space, and a discount carrier a la Southwest Airlines Co.is quietly demolishing the business models of the major players.<\/p>\n","protected":false},"excerpt":{"rendered":"
PM Narendra Modi has sought Tata\u2019s help to rescue the struggling airline, people familiar with the matter told Anurag Kotoky and Bhuma Shrivastava of Bloomberg News this week. The conglomerate\u2019s board would want state banks and India\u2019sairports to take a haircut on some of Jet\u2019s commitments to them before going ahead, one of the people […]<\/p>\n","protected":false},"author":1,"featured_media":47456,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[410],"tags":[],"class_list":["post-47455","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/47455","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/comments?post=47455"}],"version-history":[{"count":1,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/47455\/revisions"}],"predecessor-version":[{"id":47457,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/posts\/47455\/revisions\/47457"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media\/47456"}],"wp:attachment":[{"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/media?parent=47455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/categories?post=47455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blastingskyhawk.com\/english\/wp-json\/wp\/v2\/tags?post=47455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}