Very good for the market!
Here's something I just read.
Very interesting indeed....
"With the Indian skies now being skewed towards the Low Cost Carriers (LCC) market, the announcement of a new entrant is simply going to fragment this market further and increase competition, thereby lowering fares, improving quality and making it even more difficult to manage bottom-lines. But even in this scenario, the Indian travel trade has by and large given the thumbs up to the proposed new LCC from Singapore Airlines (SIA). This global aviation giant will be the next to tap the Indian market as SIA has recently announced plans to foray into the LCC segment, catering to Asian countries.
According to a news release, SIA plans to unveil a new low-cost airline that operates wide-body aircraft on medium and long-haul routes. The proposed airline will be unveiled within a year’s time. While owned completely by Singapore Airlines, the new airline will be operated and managed independently from SIA. Although the airline has not yet announced the brand name under which the airline will be operational, SIA is under process to appoint a new management team in Singapore to spearhead the airline’s operations.
Goh Choon Phong, Chief Executive Officer, Singapore International Airlines, informed, “We are seeing a new market segment being created and this will provide another growth opportunity for the SIA Group. As we have observed on short-haul routes within Asia, low-fare airlines help stimulate demand for travel, and we expect this will also prove true for longer flights.”
The country already hosts around seven LCCs besides several international LCCs such as AirAsia and Air Arabia catering to the Indian mid-end segment and creating intense competition in the Indian market. Meanwhile, SIA’s announcement has received encouragement from the Indian travel trade as top officials see it as a welcoming move.
Commenting on the ongoing trend and competition in the LCC segment, Vipul Saxena, an independent aviation analyst stated, “SIA, to my knowledge has catered to the Indian aviation market in a good manner with their on-time services from around six cities in India. The airline intensified the competition in India by announcing their regional subsidiary, Silk Air, and sustaining the same momentum. SIA will further heat up the competition with this announcement. I expect the carrier to gain around seven to eight per cent of the market share in India within one year of its launch, and it won’t take more than six to eight months to establish and run operations smoothly. The launch will bring intense competition in the LCC segment making other carriers lower their ticket prices. In India, the LCC segment is expected to grow by 35-40 per cent year on year.”
While speaking of the prospects of SIA’s low-cost airline in the Indian market, Rajji Rai, President – Travel Agents Association of India (TAAI) said, “SIA’s low-cost model will be definitely successful if they launch in the Indian market and we, the agents would like to encourage SIA because the benefit of low-cost airlines always goes to the consumers. Anything benefiting consumers, will be a benefit to travel agents. Previously, when the low-cost airline concept was brought up by Deccan Airways in India, travel agents thought low-cost airline ccould not capture any markets, but their success has been notable. Spicejet and Indigo are prime examples in this category. Likewise, international low-cost carriers such as Air Asia have been remarkably successful.
P Sampath Kumar, National General Secretary, TAFI said, “The prospects of SIA’s low-cost airline or any other low-cost airlines launching in the Indian market seem good as India is developing into a huge source market for international airlines, although the success of these carriers depends on where and which category of clients they plan to serve.” He further explained that low-cost airlines and full-service carriers have completely different client segments to cater to. He further added “As per the travel agent’s side, we will first target full-service carriers and later low cost airlines.”
Biji Eapen, National President – IATA Agents Association of India (IAAI) said, “IAAI will demand commission from all airlines operating under the Indian sky be it low-cost or full-service carries.” He further alleged that international low cost carriers do not provide appropriate service to long haul travellers. “Sometimes business crowds have to choose full-service carriers for long-haul journeys. Both concepts have different clientele.”
“If you look at the Low Cost Carrier (LCC) market in India, the segment is growing at a good rate with more than seven Indian companies offering low-cost services. As far as international LCCs operating in the Indian market are concerned, no profits are being made from their India operations. Further, the airlines don’t provide a commission to travel agents, due to which travel agents in India have totally abandoned the airline and therefore, it is hard to book AirAsia tickets through travel operators. Considering such issues and the fact that SIA has strong foothold in India, it can be said that the low-fare services offered by SIA will be welcomed by a price sensitive market like ours. Considering the pricing factor and building a better strategy for the India region will help SIA launch new low-fare services in India,” opined Pradip Lulla, President, TAFI."