Aviation: Low-cost carriers to fly higher than full-service rivals

With the 'other' India that does not live in the metros and big cities reaching for the sky, low-cost carriers may soon rule the skies. From being fringe players, the LCCs are now big enough to give their bigger rivals a run for their seats.


SpiceJet overtook Air India in terms of market share for May this year. Air India's market share for the month slipped to 13% while SpiceJet recorded a market share of 14.2%. Not surprisingly, the LCCs are expected to do better business than their full-service counterparts this fiscal.

Indigo Airlines has also been able to compete and win over passengers from Kingfisher Airlines (20%) and has been able to grow its market share to around 20%. SpiceJet is slated to add 11 planes to its fleet of 26, and Indigo, it is reported, would add 10-12 aircraft.

Both the LCCs will use these capacity additions to penetrate into tier-II and tier-III cities. A market share of over 40%, capacity additions and a higher load factor than full-service carriers means LCCs are likely to attract more passengers too.


Also, their ability to discount ticket prices will work in their favour. On the other hand, full-service carriers would find it increasingly difficult to pass on the hike in fuel prices to passengers, if crude prices continue their rise above $100/ barrel.


LCCs are expected to post a healthy demand growth of 12-14%. This, together with capacity addition plans, would help them to secure higher revenues than their full-service counterparts.

Aviation: Low-cost carriers to fly higher than full-service rivals - The Economic Times