The airline industry pretty much follows the trajectory of an aircraft. Considering the Indian airlines industry, the present is bleak with most of the airlines making losses and the future looks bright with the entry of new players. This report addresses the emerging trend, i.e., commoditisation of domestic air travel, keeping in mind both the opportunities and threats in near future and also provides recommendations like leveraging social media, effective use of Internet, identifying other sources of ancillary revenue, effective talent and operations management and lobbying with the government for making the necessary policy changes to tackle these trends.

 With the increase in the middle class population combined with the rise in per capita income and the standards of living, the rise in the demand for air travel has seen a huge surge. The Ministry of Civil Aviation, in its Draft of National Civil Aviation Policy of 2015 has mentioned India to be among the top three nations globally in terms of global passenger traffic. It also states that India owes this advantage to its ideal geographic location between the eastern and western hemisphere and rapidly growing economy. CRISIL, in its Industry Analysis section, also mentions, increased urbanisation, modern airports, declining ticket fares, newer airports in Tier II and Tier III cities etc. as factors contributing to this. But, is the future as good as it looks like or is there a trap awaiting the Indian airlines industry to fall into?

 What do the experts predict?

WNS Global Services, in its article, mentions that the airline fares are going to fall in the near future because of fall in fuel prices, dull economic conditions and increasing competition. The Business Standard article on NCAP 2015 backs this statement under the regional connectivity scheme, where the airfares will be capped at Rs. 2,500 for a one-hour flight by the MCA. (Jha, 2015). Apart from all this, other factors like increase in information available to consumer about existing fares because of Internet will also lead to the reduction in prices. The Economic Times article makes it clear that the changes in FDI policy for the aviation sector is also going to work as a double edged sword. (Martin, 2013). It will infuse more capital in the sector leading to its development and at the same time will also raise competition from foreign players trying to take a bite in the share of domestic players.

 Milind Sohoni, in his article for Wharton identifies the rise of new aspiring players like Turbo Megha and Air Pegasus as a major driver for fall in prices combined with the improved railways and highways. (2015). The comparison that he draws between the time a passenger takes in travelling from Mumbai to Pune using the highway and by an aircraft fairly proves the point he is trying to make, “India is a country with infrastructural constraints.” He finds it difficult to draw a conclusion as to what is the glamour in this industry that keeps on motivating the investors to put their funds here. The founder of Air Deccan, G.R. Gopinath’s statement, in the same article, answers this by saying, “Only about 2% to 3% of India’s population can afford to fly, this means that with the right ecosystem both from the government and the industry, and if the right model is adopted, there is tremendous scope for the industry to grow.” There lies a huge potential in this rapidly rising economy which is attracting the new players to try their fortunes irrespective of the current situation of the existing players who are neck deep in losses and debts, as shown in the CRISIL Thought Corner, Profitability of domestic airline companies far lower than global airlines.

 All the trends above suggest that domestic air travel is becoming commoditised. In NCAP 2015, MCA states that the government has proposed to take flying to the masses by making it affordable. Starting with Air Deccan and then more than a dozen of LCCs coming into play, the domestic air travel has turned into a simple commodity in the eyes of consumers. Each airline is trying to minimise the prices by offering high discounts and the same services. A consumer no longer cares about the flight she is taking for travel. She just uses the sort function to find the cheapest flight. In a quest to have the largest share of the pie, the whole industry is losing on a whole by commoditising the air travel. The prices have fallen to an extent that it is forcing the full service carriers to reduce the gap in prices and move towards the same direction. Now, it is time for the companies to step out of the comfortable corporate zone and find newer ways of differentiating themselves to be preferable and profitable.