India: Two-cent fares are killing airlines in India's cutthroat market

Global carriers have flocked to India, lured by a domestic travel boom and what’s expected to be the world’s third-biggest aviation market by 2025. Yet India has proven an intensely competitive market, where profits are scarce and the life expectancy of weaker airlines is anything but certain. Jet Airways India, one of the first carriers to launch after the market opened up in the early 1990s, said in a filing this month that it needs cash to meet liquidity requirements. Its stock price is in a free-fall and the company’s board, which deferred announcing earnings by more than two weeks, is due to meet Monday to discuss austerity measures and a turnaround plan. It’s the latest sign of financial distress in a market beset by a crushing fare war that’s made life difficult for foreign carriers, ranging from Malaysia’s low-cost AirAsia to Singapore Airlines, not to mention a teeming field of domestic players. The competition is set to intensify if Qatar Airways follows through with its proposal to start a short-haul airline in the country. The Indian commercial aviation industry has pretty much been in shakeout mode ever since the government ended a state monopoly enjoyed by Indian Airlines in 1994. Debt-burdened Kingfisher ended operations in 2012 -- and 10 other domestic carriers remain locked in a largely profitless struggle for passengers, despite operating in the world’s fastest-growing market. Indian carriers pay the world’s highest jet-fuel prices, thanks to local taxes of as much as 30%. But the real killer has been a protracted fare war that’s driven ticket prices so low that they can hardly cover costs. Story has more background.<br/>