Tata-SIA will have positive impact on industry

Our Bureaus Mumbai/New Delhi | Updated on September 20, 2013 Published on September 20, 2013

The general consensus emerging among aviation industry players and analysts is that the new full-service airline planned as a joint venture between Tata Sons and Singapore Airlines will have a positive impact on the domestic aviation sector.

While some airline promoters feel there is enough space for a new entrant in the market, others, such as independent analyst Sharan Lillaney, feel the entry of a strong foreign airline such as Singapore Airlines will bring the required expertise to deal with a competitive market like India.

“Indian airline companies are not well capitalised. But SIA is a profit-making airline and is quite experienced in handling joint ventures,” Lillaney said.

better services

Analysts also add that the entry of a new full-service carrier will result in better services. However, what needs to be seen is how well the new venture turns out for both the partners in view of the slowdown and a shrinking market share of full-service carriers in India.

Pointing out that the Tata-SIA new joint venture is strategically an interesting move, Dhiraj Mathur, Executive Director, Pricewaterhouse Cooper, said it might be a smart move to have two separate airlines.

“Running a low-cost airline and a full-service airline in the same company is always a challenge because of the different business models,” he added.

Others, like the promoters of an existing airline, feel that in a market where price wars are common, there is every likelihood that “the Tata’s new venture will eat into the Tata-AirAsia low-cost airline.”

“With the possibility of common board members, it needs to be seen how comfortable the managements of the two airlines will be discussing sensitive information relating to ticket pricing and contracts with vendors,” another airline promoter said.

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Published on September 20, 2013
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