“I AM running a marathon,” says Jeh Wadia, the founder of GoAir, a low-cost Indian airline. “I am not increasing my pace.” In India’s competitive air-travel business, slow-and-steady wins the race, reckons Mr Wadia. GoAir started in 2004, has 19 aircraft and a modest 9.2% market share (see chart). It has seen bigger carriers come and go. Two years ago Kingfisher Airlines, an offshoot of a drinks company, ceased flying, going the way of Air Deccan, Air Sahara and Paramount Airways before it. GoAir may be small but it is profitable, a boast some bigger rivals cannot make.Air India, the state-owned carrier, is a money-pit. Its latest bail-out, agreed in April 2012, gives it until 2021 to complete a turnaround. It is tough to compete with a rival whose losses are endlessly underwritten, or with other ailing airlines that slash fares to stay alive. In other parts of the world budget airlines can cut costs by outsourcing maintenance, baggage-handling and security. Indian airlines must keep such functions in-house, although the regulations may soon be relaxed. There are other costs. Aviation fuel is heavily taxed. Trained pilots are scarce. No wonder...
from The Economist: Business http://ift.tt/1FvK0HV
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