degree
of
market
power
within
Indian
aviation
2005:
PLAYERS
JET AIRWAYS
NACIL
AIR DECCAN
AIR SAHARA
TOTAL
2006:
PLAYERS
INDIGO
SPICE JET
NACIL
JET AIRWAYS
TOTAL
MARKET SHARE
36.1
30.8
12.1
11
90%(Oligopoly)
HHI - 2500
MARKET SHARE
29.5
19.8
19.1
17.1
85.5%(Oligopoly)
HHI - 2000
From the above table it can be inferred that the market power has
reduced currently when compared to 2005. But this can be
accounted to a number of new players evolving, mergers and
acquisitions etc.. In this type of market the biggest threat is new
entrants. Only the players who were able to operate effectively
still remain. There have been cases of price wars between them.
Thus the market power is still low and the demand supply curve
will be kinked. If one player raises the price, the others wont.
Whereas if one lowers the prices the other players will try to offer
even lower prices. This has limited the power of the airline
operators in the market since they do not operate by collusion or
cartels.
Question: 2
What are the barriers to entry faced by new entrants, such
as AirAsia India, in the Indian aviation market?
in
the
Indian
aviation
industry.
Stung
by
this