✈️ The Aviation Wars ft. IndiGo, Tata, Akasa

The aviation industry is considered a money sucker across the world. So, why are more companies entering this space in India? ReadOn!

"If you want to be a millionaire, start with a billion dollars and launch a new airline."

This quote by Richard Branson sums up how hard it is to make money in the aviation business. 

But Indian airlines are not giving up anytime soon. While some are trying hard to flap their wings and stay in the air, others (like Air Deccan, Kingfisher) have crashed. 

This high-speed race has now come down to three major contenders: IndiGo, Tata and Akasa Air. 

Yes, IndiGo is back to dominate the skies after a brief setback from Air India owned by the Tata Group. 

So, with Tata and IndiGo constantly taking over each other, who is likely to win this race in the long term? 

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🏃 The Race for the Skies

For the longest time now, IndiGo airlines has been the undisputed king of the airline space. 

It is one of the only Indian airlines that has been able to crack the profitability code (let us know if you want us to cover IndiGo's secret in detail. P. S. Go Air also has managed to be profitable for some time). 

Other airlines have also been curious about its profitability secret, and have now crowded the skies. 

The new players are Air India, Jet Airways (back from the dead) and Akasa Air. 

Now, their entry raises two questions. 

1. Can they really take on IndiGo? 

2. Why the hell have they entered this space? 

Let's take the second question first. 

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🤔Why are New Players Entering the Unprofitable Airlines Business? 

Here's an interesting stat:

Airline passengers are set to increase from 341 million in 2019-20 to 827 million in 2032-33. That's an insane 142% rise!

Wondering why? 

You see, with India's rapid growth, the disposable income of Indians is also rising. 

So, more and more Indians are now taking flights. More and more airlines want a piece of this huge pie.

Now, with such a huge customer base, there should be space for many airlines, right? 

Wrong! Because of consumer psychology. 

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📉 Why Airlines Fail to be Profitable

What is the first thing you do when booking a flight ticket? 

Look for the ticket with the lowest price, right? (Unless maybe you're directly related to Mr. Ambani or Mr. Adani). 

So, airlines constantly have to compete with each other to give you the cheapest tickets. 

Now, IndiGo has figured out how to do this and stay profitable. 

But other airlines are struggling with the high costs of leasing aircrafts, paying airport fees and giving tickets at low prices. 

So, all this while, competitors came and perished or seemed to be bleeding money like SpiceJet. 

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🤨 The Race Intensifies

Now, the airline has finally gotten some worthy competitors. 

Competitors with deep, deep pockets: Air India backed by Tata and Akasa Air backed by the late Rakesh Jhunjhunwala. 

And they are proving that they are here to stay. 

While Akasa is selling flight tickets that are around 10% cheaper than IndiGo and GoAir, Tata is consolidating Air India, Air India Express, Vistara and AirAsia India. 

The combined force of these airlines will help Tata manage the business much more efficiently, making it a threat to IndiGo. 

And the plan already seems to be working. 

For the first time ever in September, Air India beat IndiGo to be the most "on time" airline. For three consecutive months.

But IndiGo wasn't going to give up so easily. 

Just three months later, it managed to steal the title from Air India once again. 

Well, this race isn't going to be an easy one. So, who is going to win? 

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🏆 The Ultimate Winner? 

Well, it's anyone's game right now. 

IndiGo is currently also seeing losses like most of its competitors. These losses are mainly due to the falling rupee and the increasing price of airline fuel, which has narrowed the margins of the budget airline. It is expected to become profitable once again after fuel prices cool down. 

But, it still sits at the throne with a whopping 55.7% market share! 

Tata is also facing troubles. Because Air India was under government control for so long, nobody really bothered making the airline efficient. Result? 

It has more employees than other airlines. Plus, it also has more expensive contracts and leases. 

Renegotiating these costs and bringing more efficiency to the airline will take a long time. 

Who's left? Akasa Air. 

It is quickly expanding and has figured out a way to offer cheaper seats without burning too much money: buying the more fuel-efficient Boeing 737 Max aeroplanes. But these planes have faced safety issues in the past and have earned a bad reputation. 

Even though they have now been cleared for flight, many people may be hesitant to travel in Akasa. 

So, we'll have to watch out in the skies to see who is going to win this race. Let us know which airline you are betting on! 

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⚡In a line: Indian airlines are basically hoping that if enough competitors fail they could earn major profits from increased air travel. 

💡Quick question: How many players do you think can survive in this industry?

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