Why is the entire indian airline industry failing to gain profitability? What’s stopping the Indian airlines industry and what could be done to revive them?
Well, read and find out about it below.
There’s a myth that the Indian Airline industry is not performing consistently. That’s not true at all! All the Indian airline companies are consistently making losses and there’s no single company that is out of this league (except Indigo to some extent). Perfectly consistent, isn’t it?
But, how has the industry been able to maintain such consistency? What has made the industry so mundane? There’s a lot to write about. So, we’ll disclose the reasons one by one in coming sections. Stay tuned.
The biggest problem is that Gucci, LV, Prada and others do not operate airlines. So, people don’t really mind whether the flight they are taking belongs to Indigo or Vistara or anyone else.
All that matters for the travelers these days is that the ticket should be cheap. Basically, what we are saying is that airline has become a commodity rather than a ‘Brand’. Probably the reason for airline industry crisis. Had there been some brand consciousness, probably at least some of the companies would have been making profits.
Increasing Oil Prices Hit Hard
If you think only common people like us suffer from increasing fuel prices then, think again. There’s an entire industry out there ‘Bleeding’ because of fuel costs! Since the airlines can neither control these costs, nor pass it on to their customers, they are left helpless.
As a matter of fact, the cost of fuel for the airlines is the highest amongst their operational costs. It wouldn’t be wrong to say that sudden increase in fuel price hits them like a natural calamity. The airlines are just not able to do anything about it but, suffer.
Since, we have just mentioned natural calamity metaphorically, here’s the effect of it in literal sense. Exogenous events such as a natural calamity, an act of terrorism, political instability etc. might bring down the demand drastically for airlines.
The vulnerability of airlines to exogenous events makes their profitability fluctuate. In fact, the airlines are quite vulnerable to such happenings and lose out on demand soon after such things happen.
What is up with the Indian Airline Industry?
Overall it looks as if the Indian airlines have lost hope as well. Reason why, Indian airlines falling There’s a cut-throat price war going on all the time and it’s not about gaining profitability but a mere battle of survival. Demise of Jet Airways is just recent. What shall we expect now?
Probably the government needs to intervene in order to ensure survival of this industry. A separate policy for airline fuel procurement and consumption might do. But, will any such thing happen in near future? It’s very hard to predict.
Hope you liked this information. Comment below with your opinions/suggestions. Should you wish to stay updated and would like to receive relevant financial news and analysis straight in your inbox, subscribe Smart Mornings.