Jet Airways' Attempted Acquisition of Air Sahara
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Case Code: BSTR219 Case Length: 19 Pages Period: 2005-2006 Pub Date: 2006 Teaching Note: Not Available |
Price: Rs.300 Organization: Jet Airways (India) Ltd, Sahara Airlines Ltd Industry: Aviation Countries: India Themes: - |
Abstract Case Intro 1 Case Intro 2 Excerpts
The Indian Aviation Industry
The domestic aviation sector in India was thrown open to private players in the early 1990s with the implementation of the open skies policy by the Government of India (GoI). Until then, the air transport services in India had been provided by the state-owned air carriers, Indian Airlines Limited (IA) and Air India Limited (AI). After the aviation sector was liberalized, a number of private carriers such as East West Airlines (EWA), ModiLuft, Damania Airways (DA), NEPC, AS, and JA entered the industry.
By the end of the 1990s, of the original entrants, only two private carriers - AS and JA - remained in the industry. These two airlines provided formidable competition to IA throughout the 1990s.
IA, which had once held a monopoly position in the Indian skies, steadily lost market share. Of the two private airlines, JA became more popular among air passengers for its on-time performance and efficient services, and by the early 2000s it had replaced IA as the leader in the Indian airline industry. Although AS was not as successful as JA, its services too were considered to be superior to those of IA. By 2003-04, IA, JA, and AS were facing more competition, this time from low cost carriers (LCCs)5 led by Air Deccan. As LCCs did not offer any frills their fares were considerably lower than those of full service airlines. The full service carriers responded by cutting fares and offering discounts. However, their fares still remained higher. Initially, Air Deccan was the only LCC in India.
However, by 2005, three more LCCs namely, SpiceJet, GoAir, and Paramount Air and Kingfisher Airlines, a value carrier had entered the industry. In addition, a host of new airlines such as IndiGo, Visa Air, and others were getting ready to take off in 2006. The LCCs were popular due to their low fares and hence were gaining market share from the full service airline companies. In early 2006, the market share of LCCs stood at 27 percent. According to an estimate by the Center for Asia Pacific Aviation6 (CAPA) this was expected to increase to as much as 50 percent by 2010. The study also made a forecast that around 20 new LCCs would be launched in India by 2006. This number was more than the total number of LCCs operating in West Asia and the Asia-Pacific regions in 2004. Thus, the full service airlines in India were faced with the difficult task of finding new ways to retain their positions in the industry...
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