Is this the end of affordable flying in India?

The Indian airline industry went through explosive growth for the last 4-5 years. Not long ago, Indians had to deal with only one state owned airline (Air India) to fly around India. With the free market reform of the Indian economy by Prime Minister P.V. Narasimha Rao, back in the late 90s,  a lot of private air lines opened shop.

Flying has historically been relegated to the rich and influential in India. But with the opening of these private air lines a lot more people could suddenly afford to fly. These air lines initially offered cheap rates to grab market share. They were so successful that the state owned Air India had to start getting it’s act together and a new air line was opening shop ever day. There was King Fisher, Air Deccan, Go Air, Indico, Sahara and the list goes on..

Cheap Rates, Explosive Coverage Growth, Competition.. what more could the Indian customer ask for? Life was good :-)..

The Government finally got off it’s back end and started building new airports (they should have done it back in the 70s) and privatizing them.. India was going to enter the group of “developed” countries.

And then came the fuel cost increases of 2007/2008 and the credit crunch that is currently affecting every economy on this planet. These airlines have started to raise prices, merge with competition and lay off people (gasp!!) And customers, being the fickle ones :), are going back to the cheaper and trusty railways [http://news.bbc.co.uk/2/hi/business/7669301.stm]. This is a crucial period for this nascent industry in India. They just showed ordinary people the joy and productivity of flying. They created a new customer base. But if this economic slowdown continues for another year or so, I am afraid, we are going to go back to the old way of high prices, bad service and monopoly..

P.S : I followed this interesting story about some lay offs at Jet Airways and wonder if we are are moving back from capitalism to socialism in India..

• Economy is bad.. Jet Airways lays off 800 air crew [http://news.bbc.co.uk/2/hi/south_asia/7670874.stm]
• Layed off staff hold protests and the local politician proclaims “we will not let any flight to take off” [http://news.bbc.co.uk/2/hi/south_asia/7672463.stm]
• The chairman of Jet Airways (Naresh Goyal) apologizes and reinstates the jobs [http://news.bbc.co.uk/2/hi/south_asia/7675202.stm]

While I am happy for the folks that got their jobs back.. I don’t know if this will allow the company to tighten it’s belt and survive the economic slowdown.