The planned Tata-Singapore Airlines carrier may need to develop a model which is a cross between a full service and budget carrier, instead of offering only premium services, if it wants to make money, according to a report from CAPA-Centre of Aviation.
In a market which is extremely price sensitive, and in which LCCs offer a relatively high quality product and experience, Tata-SIA will need to carefully consider its market proposition on domestic routes. It appears unrealistic that Tata-SIA could pursue a Kingfisher-style premium model.." the Sydney-based consultant said in its report.
On September 13, the Tata Group announced that it was establishing a 51:49 JV with Singapore Airlines to operate a full-service airline based in India.
CAPA in its report said the JV might soon look to start international operations, especially since the government is set to scrap its current rule which says domestic airlines have to have a fleet of 20 planes and 5 years of local flying before they are considered for international operations.
Low fare carriers currently control the biggest chunk of India's domestic passengers and are more profitable due to their leaner operations.
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