The gradual descent of Jet Airways’ operations over the past few months has proved to be a boon for the other players who are not only looking to capture the temporarily out of service airlines’ market-share, but also benefit from the soaring ticket prices.
The markets have been quick to respond to the development. SpiceJet and Interglobe Aviation (IndiGo’s parent company) have outperformed the benchmark index thus far in calendar year 2019 (CY19) with a gain of nearly 36 per cent and 49 per cent respectively, as compared to 9 per cent up move in the S&P BSE Sensex, ACE Equity data show. Jet Airways, on the other hand, lost 13 per cent during this period.
“Aviation is an oligopolistic industry where small number of firms compete. Barriers to entry are significant. Jet’s (temporary) closure will benefit the other players over the medium-to-long term and that is what the markets also expect,” says G Chokkalingam, founder and managing director, Equinomics Research.
