India and China - 2 New Basket Cases?

Both India and China are suffering from the affects of the global recession. India remains down after suffering from the high price of oil during the summer. China on the other hand is suffering from some mis-steps that have been both self inflected and some external problems.

For China now the consolidation appears to be under way with a contraction from the current big 6 down to perhaps 4 or even 3 major carriers. The first to succumb from the urge to merge is the oft engaged China Eastern and Shanghai airlines. Interestingly the architects of the failed SQ marriage appear to have been given the boot with the New Chairman of China Eastern being the former Chairman of China Southern and the new President being from CNAC.

For India the consolidation process is now being felt in the domestic market. Indian Ministry of Civil Aviation reported November's domestic traffic highlights as follows: Total - Passenger numbers: 3.0 million, -21.7% year-on-year fall 2008 from 2009. With Kingfisher and Jet now coordinating activities they form the most powerful block in Indian Aviation's domestic market with over 50% of the market. Here are the rest of the results for November 2008:

Jet Airways (including Jetlite): 802,000, Down (for mainline -33.1%);
Kingfisher + Deccan: 746,000, Down (for Kingfisher -33.1%);
Air India: 539,000, Down -10.0%; (including Indian Airlines)
IndiGo: 441,000, +16.7%; a surprising growth spurt puts them into 4th place ahead of
SpiceJet: 325,000, -19.6%;
Paramount: 71,000, +121.9%;
Go Air: 70,000, -59.1%;
MDLR: 7,000, n/a;

So traffic is definitely going down there.

This will reshape the market and poses a challenge for the OTAs in the market. However alliances are not that stable. So can we rely on Jet and Kingfisher (with their chairman and their reported strong egos) staying friends? That remains to be seen.

Cheers