Jet-Kingfisher alliance has more than 50% of domestic capacity at seven of top eight domestic airports; Indian domestic demand now falling at almost 20%

Image: Kingfisher boss Vijay Mallya (left) and Jet Airways owner Naresh Goyal
Kingfisher boss Vijay Mallya (left) and Jet Airways owner Naresh Goyal announced their alliance in a bid to reduce the increasing fuel costs across India for both airlines. The new Jet-Kingfisher alliance will command over 50% of the market on domestic routes.

With demand for domestic air travel in India being severely dented by fuel-related increases in airfares and none of the airlines reporting significant profits, consolidation has been the name of the game in India recently. First Jet Airways acquired Air Sahara and re-branded it Jet Lite. Then Kingfisher merged with Air Deccan and has now rebranded it Kingfisher Red. Even the government owned Air India and Indian Airlines have been brought closer together in an attempt to make them a more viable entity.

Logo: Jet Airways and Kingfisher Airlines

Chart: Indian domestic air traffic growth
Source: AAI, DCA India

Domestic air travel grew by 40% in 2006 and 30% in 2007. However, since June demand has been falling when compared with figures from one year ago.

Alliance of the two biggest private airlines

India’s two biggest private airlines recently announced a major alliance to help cut costs and thus improve margins. Both airlines have even taken steps to slow down the delivery of new aircraft. An analysis of current domestic capacity shows that Jet Airways and Kingfisher (which includes Kingfisher Red) are already the two largest airlines in the domestic market and that when combined with Jet Lite the combined alliance has around 52% of domestic capacity and almost 59% of domestic flights.

Carrier Frequency share Capacity share Number of routes
Kingfisher* 29.9% 24.0% 139
Jet Airways 21.5% 21.0% 84
Indian Airlines 17.2% 16.9% 109
Indigo 9.0% 12.0% 45
Spicejet 7.6% 10.6% 40
Jet Lite 7.2% 6.9% 52
Go Air 2.4% 3.2% 16
Air India 1.4% 2.3% 11
Air India Express 1.2% 1.5% 17
Paramount 2.6% 1.4% 10
* Includes Kingfisher Red (previously Air Deccan)
Source: OAG Max Online for w/c 20 October 2008

If Indian Airlines, Air India and Air India Express are combined their resulting market share (of capacity) is just over 20%, while Indigo (12%) and Spicejet (10.6%) are the only other airlines with at least double-digit market shares.

New alliance has at least 50% share at top six Indian airports

Analysis of current schedule data at India’s top eight airports for domestic traffic reveals that the Jet-Kingfisher alliance has at least 50% of domestic capacity at all of them except Ahmedabad, where it is still the leading airline.

Chart: Domestic departures at Indian airports
Source: OAG Max Online for w/c 20 October 2008

At the new Bangalore airport it has a massive 70% of domestic capacity, almost eight times more than the next biggest carrier Indigo. Clearly such market dominance will help the alliance to better manage capacity and demand on domestic routes and help both airlines to improve their profitability. However, it also suggests that the heyday for Indian low-cost air travel is well and truly over.


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