India set to become world`s leading LCC market
Centre for Asia Pacific Aviation predicts the LCC market share in India will reach 70% by 2010, making it one of the world’s leading LCC markets in terms of total market penetration. Given the growth potential of the market and penetration levels already achieved by LCCs, the Centre predicts that within the next five years, India could see the establishment of a home-grown LCC with the size and scale approaching that of easyJet or Ryanair today.
The prediction comes as the Centre prepares to hold its third annual India and Middle East LCC Symposium in Mumbai on 29/30 September 2006.
“The launch of IndiGo in the past few days will keep the market growing strongly in the months ahead”, stated the Centre’s CEO Indian Subcontinent & Middle East, Kapil Kaul.
“Full service carriers are, on average, bleeding a remarkable 1.5 percentage points of market share every month to LCCs. We do not expect this rate to slow in the short term, given the profile of current fleet orders. LCCs could therefore control over 35% of the domestic market by the end of 2006 and pass 50% some time in 2H07. The Indian domestic market has been growing at almost 50% so far this year. The emerging untapped leisure/VFR sector will drive the domestic market to more than double over the next five years (growing at 25% annually) to around 60 million passengers by 2010 – and LCCs will gobble up most of the new traffic growth”, said Mr Kaul.
“But high fuel costs, low yields and congested airport infrastructure pose major risks to the sector going forward and have the potential to place a major strain on airline finances. While we are not predicting a bloodbath, airlines will need to be careful with capacity and ensure they are well funded”, concluded Mr Kaul.
The Symposium will cover issues including international and domestic market prospects, as well as the potential viability of long-haul low cost models serving the Indian Subcontinent region.