Industry Analysis Case Study

Low Cost Carriers in India: A Smooth Ride?

OR

Abstract:
The aviation sector in India is booming with a growth of 24% in 2004 - 2005. Much of this growth is attributed to the Open Sky policy of the Government and the advent of Low Cost Carriers (LCCs) which led to a drastic drop in air fares. Air Deccan was the first LCC in the country followed by Kingfisher Airlines and Spicejet. This spurt in growth of LCCs is affecting the market shares of the mainstream carriers such as Jet Airways, Sahara Airlines and Indian. These airlines too have entered the fight by introducing discounted fares and customer loyalty programs to retain their customers.

Given the vast population of the country, there is great potential for the LCCs and the market is yet to see a number of new entrants. High fuel costs, lack of adequate infrastructure and trained personnel have been the challenges faced by the LCCs. Experts opine that conditions in the India are not favorable to the growth of the LCCs and hence could be a major hindrance to their success.

Pedagogical Objectives:

• To discuss the effect of LCC on airlines industry
• To understand the benefits and limitations of LCC in India.

Keywords : Business Model; Low Cost Business Model; Budget Carriers; Domestic Aviation Industry; Growth Strategies Case Study; Indian Airlines; Air India; Air Deccan; Air Sahara; Spicejet; Kingfisher Airlines; Jet Airways; LCC Business Model; Aviation Infrastructure; GoAir; IndiGO