MARKET ANALYSIS
http://www.aviationbusinessme.com October 2018 · AV I A T I O N B U S I N E S S 23
Flydubai, which also operates out if its hub
at Dubai International Airport.
In the six months of their partnership
until April, the two had booked a combined
650,000 itineraries. Emboldened by the
plans, Saudi Arabian Airlines now plans
to commence hub operations in 2019 at
the revamped Jeddah Airport with new
low-cost subsidiary Flyadeal. Similar plans
are afoot in Oman and Kuwait as well.
With foreign ownership of airlines
remaining restricted in the region, the
hub model – where domestically owned
low cost carriers feed into large full ser-
vice carriers – could be the best way to
protect the regional industry from com-
petition beckoning at its doorstep. And
also prevent the kind of price war that
is wreaking havoc in India.The cost of run-
ning an airline in
India is not ade-
quately compensat-
ed by fare inputs
... That is the
fundamental issue.”other regional airlines in trouble as well
before. Cathay Pacifi c Airways Ltd and
Singapore Airlines, the two premium
Asian carriers, are in the midst of a trans-
formation to help bring them back to a
path of sustainable profi t.
In contrast, Air India, the state carrier,
is surviving on bailouts and no bidder
showed interest when the government
wanted to dispose of some of its assets
this year. AirAsia, which entered in 2014
with a vow to break even in four months,
is still nowhere close to its goal. Vistara,
Singapore Air’s joint venture with the
Tata Group that started in 2015, has yet
to ma ke a ny money. SpiceJet a l most col-
lapsed the previous year.
“ T he cost of r u n n i ng a n a i rl i ne i n I nd ia
is not adequately compensated by fare
inputs,” says Kapil Kaul, chief executive
offi cer for South Asia at Sydney-based
CAPA Centre for Aviation. “That is the
fundamental issue.”Could the Gulf carriers be next?
After the US, Europe and India, the Gulf
is the logical next market where low-cost
price wars could disrupt the full-service
carrier model that holds sway here.
As Norwegian Airlines, Wizz Air and
even I nd igo added operations i nto t he UA E,
Emirates president Tim Clark referred to
the low cost carrier phenomenon as the
“gathering storm” in a much publicised
interview last year, adding that there was
more to come. However, Emirates moved
to pre-empt low-cost carriers carving out
market share through its partnership withThe market share of Jet Airways, down from its high of 36% 15 years ago.Rahul Bhatia, co-founder of InterGlobe Aviation
Ltd that operates IndiGo.