Emerging Duopoly in Aviation Sector
Duopoly is a market structure in which there are only two sellers of some goods and services. In India’s Civil Aviation sector, this duopoly may be emerging for new future due to problems faced by Jet Airways, SpiceJet, GoFirst etc on the one hand and rising of IndiGo and Tata Group Airlines – Air India, Vistara, and AIX Connect (Air Asia India) on the other. Between them, IndiGo and Tata group now control a staggering 87.7% of India’s domestic civil aviation market.
Market Share of various companies in May 2023:
Further, both these airlines have lined up massive fleet expansion and modernization plans, with the latest announcement of IndiGo ordered 500 Airbus jets – the biggest ever aircraft order in the history of commercial aviation.
This duopoly may lead to reduced competition which may result into:
- Higher Prices
- Lower Quality of Services
- Less Innovation – When there are limited players in the market, there is slower adoption of technologies.
- Reduction in customer choices.
- Increased potential of collusion
- Difficult for others to enter the market – Duopoly collusions and high cost of entry in aviation sector may further lead to problems.
Way Forward: Meeting the risks of duopoly in the aviation sector:
- Government Regulation to ensure fair competition and consumer rights protection.
- Incentivizing new entrants through financial assistance, reduced entry barriers etc.
- Ensuring transparency and fair play in the sector could encourage healthy competition. This could involve measures like a clear and equitable allocation of airport slots, unbiased access to infrastructure, and fair distribution of air traffic lights.
- Consumer Education can also play a role in mitigating the risks of a duopoly by being aware of the potential problems and by demanding high quality service from airlines.