The capacity crisis in Indian skies was short lived. From overcapacity is killing airlines due to undercutting of fares to there is under capacity in India and airlines have hiked fares was very quick.
The argument was aided by an unfortunate event — the suspension of Jet Airways. While there is no evidence to prove that Jet Airways fall was a result of capacity, the principle of survival of the fittest played a huge role in the fall of the airline, amidst capacity addition (dumping?) by low-cost carriers.
The fall of Jet Airways had started in third quarter of last financial year, exactly this quarter last year when the airline reported a loss of Rs 1,297 crore. It was also the quarter when IndiGo posted a loss of Rs 652 crore.
World over, airlines adjust capacity to demand. A very popular way of planning for airlines, especially in Europe and North America. Unfortunately, the same is yet to take roots in India. Read More