After consolidation, now fight for dominance among airlines

After major consolidation moves, its now turn of 2-year old Low Cost Airline, Spicejet to catch the fancy of other airlines. Jet Airways and Kingfisher have envisaged an interest to acquire a stake in the company. Paramount Air is also understood to be in the race.

SpiceJet, having a market share of 8.2%, currently has a fleet of 11 Boeing aircrafts and plans to have 14 more by next year. It is backed by investment banks such as Goldman Sachs, HSBC and Dubai Investment Funds, Royal Holding Services and Istitmar holds around 13% each stake.

For Jet Airways, the acquisition would again make him the market leader with a 38% market share. It will also provide pricing powers and help attain synergies in coverage, engineering, pilots, maintenance and training. Also the common Boring fleet with Air Sahara works well for Jet.

For Kingfisher, it would give an edge over Jet Airways and maintain its market leadership. It will also have an advantage of running two fleets of aircrafts both Boeing and Airbus, which have their own distinct advantages.

However, newspaper reports say that Tata, who holds a 6% stake in Spicejet, could play a spoilsport. As they have good rapport with other investors in the company, they could abort Jet’s bid as Tatas would not like to partner Jet. During the 90s, it was Jet Airways who aborted Tatas plan of launching a new airline.