Indigo-Jet Deal Could Set Stage Not Just For Consolidation, But Sector Turnaround


There is a famous old joke in the airline industry: “How do you become a millionaire in the airline industry? Start as a billionaire and buy an airline”. Things are clearly not as bad they used to be: Legendary investor Warren Buffett, who once called airline industry a death trap, has invested in four major US airlines in recent times.

Apart from the impact of benign oil prices, there’s another positive: Structural changes are taking place within the industry, one of which is consolidation.

The Indian aviation sector continues to remain an attractive market, with the top three players (IndiGo, Jet Airways, and SpiceJet) commanding more than 70 percent of market share. In addition, the market has witnessed double-digit passenger growth for a while now. However, these tailwinds are yet to translate into pricing power. Read More…

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