A few years ago, here in India, the “low cost” airline made headlines every day. Here was a new business with ripe pickings, everyone said as one company after another joined the fray. They based their investments on a growing population with high aspirations. The first time flier increased by leaps and bounds. Many a story went around about how the hick behaved on his/her first flight. The traffic at the airports for domestic flights ballooned month after month.- and I am not just talking of the motor traffic which led to perpetual jams outside these airports. Everyone seemed to be happy- the airlines, the passengers and the Government which got its share of the kitty through taxes.
A few years later, we find that most of these “low cost” airlines are either folding up, have been bought out or are merely limping on. “Where India’s airlines went wrong” in the Economic Times is informative and thought provoking if you are involved in business strategy.
Business is not about looking only at the rosy side of the picture. To remain profitable over the long run calls for extensive spade work in studying the business model and market projections carefully. A few mistakes in misreading the market potential- not in terms of revenues alone but in terms of overall profitability- can effectively kill the business. In the airlines story in India, the passenger traffic has actually increased compared to earlier projections but the costs – expected and unforeseen- have both risen far more to make some of these airlines nonviable.
Sadly for these low cost airlines, they appear to be “low cost” no more.
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This is Post No: 215 of the “A Step A Day” series : To provide perspective and provoke thought to facilitate self-development across a wide spectrum of issues- big and small- crucial for executive success