Indian Airlines, Jet, Sahara To Benefit

The main beneficiaries of the Tata decision to withdraw its proposal to set up a domestic airline will be rivals Jet airways, Sahara and Indian airlines (IA). The three airlines at present control the total domestic aviation market with the share of IA at around 65 per cent and that of Jet airways at around 26 per cent and the rest with Sahara airlines.

Ministry sources have in fact conceded that the Tata airlines project does not pose any credible threat to IA and Jet airways on grounds of excess capacity in the domestic market.The airline had plans to launch with a small fleet of 7 aircraft in the first year, going up to 18 in the next five years.

This was a small number when compared with IA's fleet of 56 planes and Jet's fleet of 22 which will be growing as per their plans and approvals taken from the ministry. The ministry has estimated that traffic growth over the next five years will be an average of 10 per cent and an additional 47 aircraft of 127 seater capacity will be required for five years starting 1998.

"This gives ample scope for a new airline to operate. Further, the capacity was also reduced by the closure of Modiluft, Damania and East West airlines." said a source. Sources pointed out that IA will also have to replace at least 25 aircraft over the next five years since many of them will be over 20 years old, in keeping with DGCA guidelines.

IA's passenger load factor is currently around 63-64 per cent while Jet airways has a higher load factor of around 70 per cent.However, it was pointed out that the traffic position this year is not very good and is lower than last year. IA said that traffic in the first 4-5 months of this year has seen a decline of around - 1.5 to 2 per cent while Jet maintained that traffic hrowth has fallen by -2.5 per cent. Further, last year IA revised its traffic projections for the year downwards from 9.3 million passengers to 8.5 million passengers.