India's airline industry could emerge stronger after shake-up

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Significant competitive shifts are likely in India’s airline industry as it begins to recover from the COVID-19 crisis. Some major ownership changes could lead to consolidation, and another player could enter the mix with the resurrection of Jet Airways. Meanwhile, the low cost giant IndiGo is increasing its dominance of the local market.

The Indian airline market has always had huge potential for airlines due to its size, but profitability has remained elusive. On the domestic front strong competition and excess capacity growth have hindered financial returns, and on the international side overseas airlines have been more successful than local airlines in tapping into this market.

However, there is a good chance the airline industry will come out of the pandemic in better shape for long term success.

Strong advances into the airline sector by the Tata Group could prompt mergers, and the privatization of Air India should set it up on a better financial footing. There were already some signs that the rapid pace of growth was moderating before the pandemic struck and airlines are likely to be even more cautious, for the immediate future at least.

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