Budget carriers eat into full services’ pie

Budget carriers have stolen the thunder from their full service counterparts, weaning away the domestic market share in an increasingly price sensitive market.

In the last five months alone, from September to January, budget carriers like IndiGo, Spice Jet and Go Air have increased their domestic market share by over 5 per cent, sprinting to grab almost half the market share. The shift was just one per cent towards budget airlines during the same period a year ago in 2009-10.

According to the data compiled by the air safety regulator, Directorate General of Civil Aviation (DGCA), the market share of full service carriers like Jet Airways, Kingfisher Airlines and Air India in September 2010 stood at 58 per cent, plummeting to 52.5 per cent in January 2011.During the same period, share of budget carriers increased from 42 per cent to 47 per cent, just three per cent short of the halfway mark. In November, IndiGo dislodged national carrier Air India from its number three spot in the domestic skies. Following month, IndiGo closed the gap with Kingfisher Airlines, tied at number two market position.

"Low-cost airlines are clearly preferred airlines over full service counterparts. Various factors like pricing, on time performance and service have influenced passenger's choice," said a civil aviation ministry official. Another official pointed out that the slide in market share of full service carriers has co-incided with shifting of their operations to the Delhi airport's new Terminal 3.

"Passengers prefer Terminal 1-D, from where budget airlines like Spice Jet, IndiGo and Go Air operate. Within ten minutes, one can reach the boarding gates from the Terminal entry points, whereas T3 requires longer walks," said the second official. Jet Lite and Kingfisher Red, the low-cost arms of Jet Airways and Kingfisher Airlines that moved to Terminal 3, too have seen an erosion in their market share.

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