A lot is cooking in aviation industry. Everyday you pick up Economic times and a major chunk of it speaks about Telecom and Aviation industry. Aviation industry is changing at a very fast pace with consolidations, investments, changes in fare and new routes making loud news.

The honeymoon period of marriage between Air Deccan and Kingfisher is over and Air Deccan is no mood to offer freebies to the customer. As expected, one time low cost flier after alliance with Mr. Mallya is all set to hike the fares by Rs. 1000. The airlines had already increased the fare by Rs 500 soon after the alliance. Since Inception low cost airlines are bleeding profusely and to put a stopper to it, hike in fare is awaited since long. Few weeks back, a meeting of all the airlines was held after which Air Deccan announced its decision to hike the fare. Other low cost airlines are also expected to follow the move. You never know, it can be a cartel!

As far as marketing is concerned, all the airlines have upped their ante and don’t be amazed if you soon get to see the advertisement of air industry on television. All the players in air industry have marked a huge amount of money for the year for their marketing spends. The players are of the view that this is an area which is neglected and there is an urge to build brand in order to grab market as there is a stiff competition posed by the rivals.

Indian airlines are now flying abroad on their own backbone without any tie up with international airlines. Recently Air India launched its non-stop service from Mumbai to New York with much fanfare. Presently, only three airlines – Air India, Indian and Jet Airways have the permission to fly abroad. Many other airlines are queuing up the door of aviation ministry in hope of getting the approval to fly abroad. The stiff rules of aviation industry do not permit airlines to fly abroad unless it has an experience of five years. This is in contrary to world over where the permit is given on a case-to-case basis. Kingfisher is lobbying hard and too keen to start offering services in international sky. Acting on this, Mr Praful Patel, aviation minister has decided to liberalize the rules and also made it clear that permit will be given henceforth on case-to-case basis. While the players, who are already flying abroad, are opposing this move, it is widely welcomed by operators who are new in the industry, as it will increase their share of pie.

US carriers are also making life uneasy for Indian Airlines and few days back one of them named, Delta offered a tempting deal of 26K for a return trip to New York from Mumbai in economy class. Indian airlines are expected to follow them and bring down their fare, which is currently priced at 50K for the same trip. With the announcement made by Mr. Praful Patel, fares are further expected to come down as new airlines are given the passport to fly in international routes.

Recent consolidation and alliance in the air industry (Air India – Indian, Jet – Sahara, Kingfisher – Air Deccan) has changed the dynamics of air industry. Furthermore, liberalization of rules will add fuel to it and will mean cheaper fares for the consumers.

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(The author is a Chartered Accountant working with TATA Group and the views expressed are personal.)

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