According to well known author and management guru Dr Jagdish Sheth, "Most Indian airlines will make money on non-airline services." He offers the example of Ryan Airways: "Ryan Airways of UK is offering $20 return trip to USA from London. They can do it as they have a captive audience for 8-10 hours to sell their products and services, which is more lucrative compared to air ticket".
Dr Sheth was speaking on the occasion of his book launch titled 'Deregulation and Competition – Lessons from the Airline Industry'. The book is authored by Jadish Sheth, Fred Allvine, Can Uslay and Ashutosh Dixit. The title is published by SAGE Publications.
The book launch saw a panel discussion featuring Dr. Jagdish Sheth, Dr. S M Dewan, Dr. CS Venkata Ratnam, Director, IMI; Kapil Kaul, CEO Centre for Asia Pacific Aviation, B S Shantaraju, CEO, GMR Delhi International Airport (P) Ltd.; Sidantha Sharma, CEO, Spice Jet; DV Gupta, Former MD, Airports Authority of India. The Event was hosted by SCOPE and organized by International Management Institute.
Crystal gazing into the future of airline industry in India, Dr Sheth added, "Airports will make more money as shopping centers rather than services to the airlines"
Participating in the panel discussion, Industry analyst Kapil Kaul said: "What we have witnessed in last 3 years is complete change -- the fleets have grown at a brisk pace". Taking note of the recent consolidation in the industry, Kaul said, "The acquisition of smaller or loss making airlines is going to shift the power in the industry from the consumers back to the airlines" Earlier this year Jet acquired Sahara Airline and KingFisher acquired Air Deccan.
Ruing the missed opportunity, Sidhanta Sharma of Spice Jet said: "A regulated industry has created two airline hubs out of India – Singapore & Dubai. These hubs are currently being used by Indians for various economic activities. Had this industry deregulated earlier, India could have had its own hub."
Taking about the future of the industry, Dr Sheth said, "Shake-out will be more aggressive in the 2nd round in India and somebody will pick the cheap assets. That's where the Rule of 3 works for the airline industry also."
Painting a buoyant picture, Kaul said, "Indian Airline industry is expected to attract an investment of 9.5 Billion USD in next 12-18 months, all the 6 gateways in India will be upgraded. Post 2010 is when we can expect that the airline industry contributing in a big way to the economic growth of the country". He added, "I predict a profitable future for airline industry post 2010."
