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The slow and steady sometime wins the race, but not all the time...

Siddhanta Sharma and Jeh Wadia really don’t have all that much in common. The latter is the scion of a business family that traces its roots back to almost 200 years, while Sharma can’t lay claim to that kind of hoary legacy. Yet, in moments of quiet introspection, or when they pick up a pink paper that announces the nth round of the war between Vijay Mallya and Naresh Goyal, the head honchos of Low Cost Carriers (LCCs) GoAir and SpiceJet must be sharing one common emotion: the unspoken agony of being left behind in the race; and the passionate dream of catching up with the big boys one day.

In the rapidly growing civil aviation industry in India, the big boys, without any doubt, are Vijay Mallya and Naresh Goyal. The former has leveraged a Richard Branson persona and loads of cash generated by his liquor empire, United Breweries, to make Kingfisher Airlines arguably the number one in the country. Mallya and Kingfisher catapulted from the margins to the numero uno slot by acquiring Air Deccan (OK, we won’t say acquiring if Mr. Gopinath of Deccan insists!). Naresh Goyal was even faster on the draw; he managed to acquire Air Sahara after a convoluted and controversial process and now straddles both the full fare (Jet) and LCC (Air Sahara now christened as Jet Lite) segment. Then there is the government owned behemoth – Indian - that is emerging bigger and stronger from the merger of Indian Airlines and Air India.

Do the smaller players have even a ghost of a chance to be one up on the big boys? Analysts will remain analysts and revel in hedging their bets, as Binit Somaia, Regional Director, Centre for Asia Pacific Aviation (CAPA) does when he pontificates, prevaricates and then pronounces, “The aviation sector is facing a phase of consolidation which in short term will be dominated by Kingfisher/ Deccan, Jet Airways/Jet Lite and Air India/Indian…” But it is also a fact that in the highly competitive market of the last couple of years, yields have been so low that for new entrants to pursue market share would have meant bigger losses. Small surprise that in the face of the biggies acquiring more and more aircrafts in a bid to expand their services, GoAir prefers to maintain a low profile, with lesser numbers.

Given the bleeding operating costs that the industry as a whole faces, would Wadia’s approach be more sensible in the long run? Who knows, Jeh Wadia might actually end up having the last laugh. At the moment, he is dead pan and dead sure that the frenetic expansion pursued by the big boys like Mallya and Goyal gives him the luxury of sitting back and watching the two go at each other. He intends to cash in when the bruised leaders will inevitably give him a window of opportunity. Who said also-rans did not have chutzpah and confidence?!


For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
When IIPM comes to education, never compromise
IIPM, GURGAON
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!