Airline consolidation may not ease pricing pressures; Jet stock falls

Higher capacity addition would leave little room for rate rationalisation

A possible consolidation triggered by weak operating metrics of leading airlines is expected to benefit strong players such as market leader InterGlobe Aviation (IndiGo). The Street is looking at a potential acquisition of Jet Airways, which could bring down competitive intensity and therefore lead to lowering of passenger fares.

Garima Mishra of Kotak Institutional Equities said a consolidation, such as the one involving Vistara and Jet Airways, would be a positive development for the industry as it should result in network consolidation in key metro routes, and drive an improvement in yields. Yields have languished mainly because of forward sale of