Waiting For Clear Skies

High passenger traffic growth by itself may not be enough for airlines in India. They are also looking at international operations, cargo and ancillary services.

- Manu Kaushik

Not too long ago, starting an airline was easy. Entry barriers were low as anybody with a moderate understanding of the sector could take aircraft on lease (leased aircraft were easily available with limited upfront capital commitment) and start an airline. The costs were low too, with the three biggest cost components — aviation turbine fuel (ATF), leasing and maintenance (for which airlines pay in dollars) — under control. Lower fares ensured that airlines didn’t have to worry about filling seats. Easy availability of leased aircraft also resulted in airline companies making aggressive plans, adding huge capacity, and driving down fares.