The consolidation phase in Indian aviation could be said to have started with the formation of NACIL—amalgamating Air India and Indian into one intended entity.

Let us now take a look at the airlines in india—the most important stakeholders in the industry. The dominant importance of the airlines lies in the fact that while every other stakeholder related to the industry is making money (albeit in a see-sawing pattern), the airlines are—without exception—incurring recurring losses. Giovanni Bisignani, Director General and CEO of the IATA, has exhorted the airlines in India and also the Indian government to take some actions and make arrangements to ride over the perfect storm of high costs and falling demand. He has warned that Indian airlines need to take the problem seriously lest they lose the opportunity to carve out a suitable niche in the global aviation market.

In recent developments, 12 scheduled operators have, post three mergers—Air India/Indian, Kingfisher/Air Deccan and Jet/Air Sahara—been reduced to nine. The three major merged entities have been cause for some trepidation with the Competition Commission of India (CCI) expressing fears that this tripoly enjoys an uncomfortably large share of the market. One of the fears is that this oligopolic situation has the potential for cartelisation of air fares in the country which may be to the detriment of the passenger. However, the current line up of airlines is fait accompli and, barring further consolidation or an odd collapse, is likely to exist for some time to come.

Nacil: uneasy union

The consolidation phase in Indian aviation could be said to have started with the formation of National Aviation Company of India Limited (NACIL)—amalgamating Air India and Indian into one intended entity. Although the reasons for this merger were not the ones that characterise marriages of convenience between airlines, the end result was more or less the same. There is one brand now, Air India, although the synergistic benefits that were expected from the merger have not been consummated to the extent intended. This is basically because the two merged entities had entirely different philosophies, geographies and working models. To top it, both were public enterprises and thus very difficult to coerce into something neither was happy about. Workers’ unions added to the imbroglio and have diluted the process of the merger considerably.