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Indian Aviation Industry-A Disaster Waiting to Happen. An Economic Analysis


Affiliations
1 Economics National Institute of Entrepreneurship (NIE), Noida, India
 

Indian Aviation Industry has undergone a sea change over the last decade. It has moved from expensive carriers to cheap economy travels affordable to the middle class. Due to the need for fast and comfortable intercity travels, the demand for this industry has expanded in recent past. Yet, we find that some of major players such as Kingfisher have been going through major turbulence. This shows that all is not well for the airline industry. The paper examines the growth of aviation sector in India after liberalization and privatization and finds that oligopolistic market in this industry has created unhealthy competition among players. Even though demand for this sector has been increasing, the industry is predicted to have major crisis sooner than later. Frequent price cuts and product differentiation, human resource problems, economic and financing problems have gripped the industry. Lastly, constraints arising due to infrastructure as well as the government's aviation policy are also responsible for problems in the sector. The paper at the end, suggests some steps to recover the industry from eminent disaster.

Keywords

Airline, Product Differentiation, Infrastructure, Oligopolistic Market.
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  • Indian Aviation Industry-A Disaster Waiting to Happen. An Economic Analysis

Abstract Views: 158  |  PDF Views: 22

Authors

Parul Kochher
Economics National Institute of Entrepreneurship (NIE), Noida, India

Abstract


Indian Aviation Industry has undergone a sea change over the last decade. It has moved from expensive carriers to cheap economy travels affordable to the middle class. Due to the need for fast and comfortable intercity travels, the demand for this industry has expanded in recent past. Yet, we find that some of major players such as Kingfisher have been going through major turbulence. This shows that all is not well for the airline industry. The paper examines the growth of aviation sector in India after liberalization and privatization and finds that oligopolistic market in this industry has created unhealthy competition among players. Even though demand for this sector has been increasing, the industry is predicted to have major crisis sooner than later. Frequent price cuts and product differentiation, human resource problems, economic and financing problems have gripped the industry. Lastly, constraints arising due to infrastructure as well as the government's aviation policy are also responsible for problems in the sector. The paper at the end, suggests some steps to recover the industry from eminent disaster.

Keywords


Airline, Product Differentiation, Infrastructure, Oligopolistic Market.



DOI: https://doi.org/10.20968/rpm%2F2012%2Fv10%2Fi2%2F100306