The Hindu Business Line : Airline industry unruffled by Kingfisher's buy

New Delhi June 1 The buyout of Air Deccan by Kingfisher Airlines may not be very good news for the ordinary passenger, but it has not created any panic or rush among the other existing airlines to scale up or find a partner to take on competition.

The general feeling among the industry is that mergers and acquisitions could bring about a level of stability in airline ticket pricing. "The days of selling tickets for free or at very low fares could come to an end. This may not be good for the customer but would surely help improve the yields of the airlines. There could also be a slight reduction in flights in some sectors as the airlines would look at combining schedules to ensure there is no in-house competition," a senior airline official said.

As for increased competition from the merged entities, most airlines do not seem perturbed. "There is no pressure or threat to us from the buyout of Air Deccan or the other developments witnessed in the sector in the recent past. In the next few months we would grow to a fleet of 18-20 aircraft, which we feel would provide us the strength to survive," Mr Siddhanta Sharma, Chief Executive Officer, SpiceJet, said.

Echoing similar sentiments, Mr Bruce Ashby, President, IndiGo Airlines, said that the developments did not change anything for the airline. "We are not looking for a partner or diluting equity as a result of the recent announcements," he added.

`Aviation has matured'

Mr Thiagarajan, Managing Director, Paramount Airways, felt that the buyout of Air Deccan shows the Indian civil aviation market coming of age. "A decade ago when liberalisation was introduced in the sector, most airlines folded up when they ran out of money. But now we are seeing maturity and, instead of closing down, airlines are being purchased by others," Mr Thiagarajan said.

The merger and buyout, however, would lead to large domestic airlines being created, and this could squeeze out the smaller players. Air India, which is being created through the merger of Air India and Indian, would have a fleet strength of 111 aircraft, while the merger of Air Deccan and Kingfisher will create an airline with close to 70 aircraft.

In contrast, the low-cost GoAir currently has a fleet of only two aircraft while SpiceJet has a fleet of 11 aircraft that would rise to 20 in the coming year.

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