Boeing says overcapacity and the fare wars that go with it continue to be the biggest challenges in the Indian market.

Speaking to Flightglobal, Dinesh Keskar, senior vice president of sales in Asia-Pacific and India, says a number of Indian airlines have been consistently profitable for a few quarters now due to the low fuel price, strong demand and predictable exchange rates.

“All that indicates that good times are here, but the moment fuel price goes up to $70-80, unless they are able to keep up with fares going up, we’re going to have a similar situation [as before]. If the fuel price goes up and the fare wars continue, the airlines are going to lose money again,” he explains.

Stressing the need for airlines in India to exercise capacity restraint, he also acknowledged that it is a “difficult situation” since airlines could lose market share if they do not match fare cuts by competitors.

Keskar adds that Indian airlines also need to build new markets in secondary cities, and not simply focus on key trunk routes between Mumbai and New Delhi. This can be done by using 70-80 seater aircraft to eventually create a market large enough to fill a narrowbody.

He is also confident that the infrastructure in India will keep pace with the estimated 8% annual passenger traffic growth. With key metro airports reaching saturation, the government is also improving secondary airports by extending runways being and adding more facilities.

Source: Cirium Dashboard