Airlines India

Good evening everyone. We are group number 3 and we are going to present before you our analysis of airlines industry in India and try to relate the concepts of industrial organizations to it. This is our agenda for the presentation. We will begin with the market structure and then see the government regulation in india. Then we will compare it with international market and see the equilibrium, economies of scale and operational efficiency. Later we will cover pricing structure and new entry and exit in the market.

Let’s begin with the market structure. The 3 firm concentration in the airlines industry decreased steeply from 2002-03 to 2005-06 due to entry of LCC like indigo, goair etc. Since then it has increased steadily due to various M&A and exits from the industry. At present Indigo is the largest player with 29.5% market share. The next largest players are jet airways and spice jet.

The major differentiation in the industry is on service level and airfares. The two basic models of airlines are LCC and full service carrier. LCC’s try to minimize the cost and hence have lower fares. These are domestic airlines with generally point to point travel. Eg indigo and spicejet. FSC cover large number of routes and follow hub and spoke kind of model. Eg. Are jet airways.