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Air India investment could be a risky bet: analyst
September 30th 2021
A global analyst has issued a note of caution to the new owners of financially embattled Air India. Read More » GlobalData travel and tourism analyst, Craig Bradley, has written that stiff competition and an increasing desire among Indians for value for money could spell problems for Air India’s new owners. The consultancy’s analysis indicated demand for low-cost airlines in India has soared after a decade of substantial growth by brands such as SpiceJet, Go First and IndiGo at the expense of [failed] Full Service Carriers (FSC) such as Kingfisher Airways and Jet Airways. “With the financial hardship brought about by the pandemic, Indian consumers are concerned about their financial situations, resulting in cutbacks in travel budgets and holidays,’’ Craig said. “In GlobalData’s Q3 Consumer survey, 43% of Indian respondents expressed serious concern about their financial situation – 13% higher than the global average. Therefore, a preference for low-cost carriers over FSCs is likely to grow, with Indian travelers looking for best value for money when they travel.” Globaldata’s projections also suggested business travel will not recover in India until at least 2025. Craig added the Jet Airways reboot, scheduled for next year, will make the landscape more competitive. “Significant challenges lie ahead for Air India’s next potential owner,” he said. “Encouragingly, the two main bidders are allegedly Tata and SpiceJet, which have a wealth of experience in the budget air industry and will be taking on a prestigious Indian brand. Should either of these businesses be successful, Air India is likely to experience a complete overhaul in its operations and product proposition. Nevertheless, whoever takes on the airline is taking a risk.” Former Air India director, Jitender Bhargava, told Bloomberg TV on Wednesday he believed the Tata Group would receive government permission to take control of Air India.
