Air traffic continues to soar for sixth straight month

The air traffic in India continued to grow around 20% for the sixth straight month, with 388.33 lakh passengers in the first six months of the year, a growth of 19.81% over the same period last year. The month of June saw a growth of 16.03% with 66.01 lakh fliers taking to the skies in June. All airlines except Air Asia India and Air Costa saw a drop in passengers carried over the month of May. The load factor charts were led by Spicejet – which recorded another month of highest load factor, clocking 93.2%, in increase of 0.1% over May2015 and 11.8% over last June. All airlines except Air India registered an increase in Load Factor over last June.

This blog in its last monthly summary had made some predictions about June and all but one came true. The one about Air Costa was missed by 0.1%. (Spicejet tops Load Factor charts, as IndiGo continues to gain market share)

June also saw the return of IndiGo, which was struggling with its On Time Performance in April and May, to have highest On Time Performance (OTP) amongst pan India carriers recording 82.6% on time flights. The chart was led by Air Pegasus, which operates a single aircraft from its base in Bengaluru. While Spicejet fills up its aircraft more than anybody else, its OTP continues to be at pathetic levels with just 60.2% OTP and half of its flight being delayed at Mumbai, and a little less than half at Delhi.

OTP Variance - June 2014 Market Share Variance

Air Asia India performance was anticipated on the back of the tweet from group CEO Tony Fernandes, which said that Air Asia India was surprisingly doing well. The move to launch services from Delhi after deciding to stay away earlier clearly seems to have benefited the airline, which saw a rapid increase in market share to 1.9% and becoming the only airline to see a significant growth in load factor over May, registering a load factor of 84%. Spicejet was the only other airline which saw a growth of 0.1%, while all others saw their load factors decreasing over the previous month. Spicejet saw return of three leased aircraft and induction of just two, without decrease in any flights. This seems to be the prime problem where there are more flights than what their aircraft can perform and thus flights are advanced and delayed to accommodate the additional flights.

OTP June 2015 Market Share Jun 2015 LF June 2015

Vistara, as predicted last month, saw a rapid decline in Load Factors and recorded just 59.3%, the lowest in the industry. As the airline plans out its next phase of expansion beginning winter schedule, sooner or later the airline will have to answer questions related to its three class strategy and how effectively it is working in India. Lately, the airline has been trying hard to fill up planes with Premium Economy being offered cheaper than Economy on certain sectors! With Jet Airways offering double or triple miles as periodical special offers on sectors where Vistara flies has not helped the airline poach fliers from other airlines.

On the airports front, for second consecutive month, Delhi saw domestic movements crossing 10,000 movements per month.

 41.1 lakh passengers, a staggering 62.3% of all fliers flew one of the low cost carriers in June. IndiGo, the largest carrier in India carried 25.37 lakh passengers, 0.46 lakh more than those combined by the full service carriers Air India, Jet Airways and Vistara, who combined carried 24.91 lakh passengers.

Quarterly Summary

The second quarter of 2015 ended with IndiGo leading the pack with 38.4% market share. Air India saw the biggest drop of 2% over Q1 CY15 and 2.7% drop over Q2 CY14. IndiGo registered an increase in market share of 6.8% over the same quarter last year, a testament of its steady growth story, while Spicejet lost 6.7% market share for the same period. Air Asia India grew by 1.3%, closing the quarter with a market share of 1.4% while Jet Airways saw a growth of 1.2% to close the quarter with a market share of 21.9% being the second largest airline after IndiGo. Air India was third at 15.8%, a position it will struggle to maintain in Winter schedule when Spicejet is expected to increase capacity further.

The increased loads at Spicejet seem to have been a factor of lower fares. Going by the fleet size it had in Q2-CY14 and now, the total revenue earned would definitely be lower. When the airline declared its result, we would know where the revenue per seat stands. There are chances that this parameter would be marginally better than last year, owing to the lesser seats deployed and higher loads.

Q2 market share

Also interesting would be to see the Revenue and operating margins of Jet Airways which has kept up its consistent performance with a right balance of Load Factor, yields and On Time Performance – making the airline an attractive option for travelers.

Q2-CY15 saw an increase of 19% passengers in line with the trend so far, over the same period last year.

July Outlook

A delayed monsoon would have helped newer airlines like Vistara and Air Asia India to stabilize their operations after both started full utilization of their fleet in June. Airlines are likely to see a drop in load factors in July. The most significant drop in passengers carried could come from Go Air which has temporarily withdrawn few flights and this will also impact its market share. There has not been any significant capacity addition from any carrier in July.

Spicejet will continue to record lower OTPs across its network. Sooner or later, it will have to stabilize to acceptable levels if it has to attract higher yielding business traffic. As monsoon sets in, the next 45 days will bring newer challenges for new carriers in Indian skies.

Market Share 2015 Load Factor 2015

 Link to previous predictions and analysis

20% more passengers fly in April, as IndiGo corners 37.8% market

Jet Airways leads the fight back against IndiGo in March as market continues to grow at 20%+

Over 20% more passengers fly this february, IndiGo widens the lead

Leading the pack yet again – IndiGo now corners 36.4% market share

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One thought on “Air traffic continues to soar for sixth straight month

  1. Monica

    Hi, your blog gives great insights about the airline industry in particular. Thanks for that.

    In view of the upcoming Indigo IPO, would love to know your take on the same :-)

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