Good news for aviation: In a strong duopoly, hope soars for struggling SpiceJet
Civil Aviation Ministry has discussions with airlines over the airfares and these were advised to self-regulate and keep passengers' interest in mind while fixing the fares. After deregulation of the aviation sector decades ago, the Indian government does not regulate airfares.
The fares, Scindia explained, are also dependent on a number of factors such as the number of seats already sold on a particular flight, prevailing fuel price, capacity of the aircraft operating on the route, competition on the sector, season, value of INR against US dollar, holidays, festivals, long weekends, special events (sports, fairs, contests) etc.
That's true of the airlines in India as well as elsewhere, but India's aviation sector has a peculiar problem — a strengthening duopoly — which does not augur well for fares, quality of services or punctuality. Many have linked recent incidents of delays and flight disruptions to the duopolistic nature of the market. A big chunk of India's aviation market is owned by just two airlines. Historically, due to various factors, the Indian aviation market has proved to be a graveyard of airlines. Very few have remained afloat beyond five years. The latest to nosedive was Go First which was grounded in May.
India's aviation duopoly
As smaller airlines struggle to stay afloat, nearly 90% of market share is controlled by just two entities. IndiGo has close to 63% market share while the Tata Group's share, which owns Air India, Air Asia, Air India Express and Vistara, totals to nearly 25%. Akasa Air, which was launched last year, has a 4.2% share while struggling SpiceJet has 5%.
A duopolistic market and other factors leading to higher fares jeopardise India's ambitious aviation expansion as it builds
