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

It was “Acche Din” yet again for aviation as the passenger growth crossed 20% for third consecutive month in March. The DGCA numbers released today, show a total of 185.46 lakh passengers having travelled in the first Quarter of calendar year 2015. While the numbers have been consistently growing, the air fares have been declining too, which could be a long term concern for the airlines.

The surprise came right at the top, with market leader IndiGo losing market share by 0.7% and Jet Airways gaining by 1.1%, over the previous month. However IndiGo continues to be market leader with 36.4% market share followed by Jet Airways at 25.4%. National carrier Air India dropped to 16.9%, a huge drop from a share of 20.4% it had last March.

Vistara continued its struggle to fill up seats with 53.6% Load factor on its flights. There was some indication of original strategy not working well as the fares dropped drastically on some sectors and some flights, even close to departure. While exact class wise occupancy breakup is not available, I anticipate that filling up Premium Economy continues to be a challenge.

On Time Performance (OTP)

As anticipated and expected, the OTP took a leap towards the better as weather across the country improved. Vistara with its limited flights and spare aircraft in fleet continued to lead the OTP charts at airports it operates too, while Air Asia, again with limited flights due to cancellations & gaps in its rotations, managed a get its operations under control.

Jet Airways has been consistently improving & stabilizing its OTP, even when it has a lot of rotations which are swapped between domestic and international flights and more at Mumbai which does not have an integrated terminal. Jet airways is now neck to neck with IndiGo in On Time Performance even as it has left IndiGo behind in Load Factor.

Spicejet which I was hoping to see at number two or three, sadly has been second last, with Air India showing remarkable improvement in its On Time Performance and claiming the third spot. DGCA does not declare OTP results for Vistara, Air Costa and Air Asia.

The going will get tough for IndiGo soon as Jet Airways pushes its operations further and Spicejet with an aim of having the best OTP in the industry, moves towards realization of it.

OTP march2015

Market Share & Loads

Air India and Air Costa could not take advantage of the growing stream of passengers as these were the only two airlines which saw Load Factors go down over last March, while Jet Airways made the most of it, with a growth of 18% in Load Factors over last March.

For market leader IndiGo, the growth was muted at just 4% and with a load factor of 77% and trailed Jet Airways, Spicejet and Go Air. Between IndiGo and Jet Airways, the control over market share is over 60%!

Market Share - MarNew inductions from January and February, should have helped IndiGo garner more load factor and market share which has clearly not happened. On the other hand, frequent limited sales, aggressive pricing and network re-jig has helped Jet Airways take the battle to the next level.

Spicejet is slowly but surely recovering from the aftermath of December as it saw a good Load factor and an increase in market share. While Air Costa remained constant with the market share, its frequent network changes may not go down well with the market and the next few months could be real test for the 4 aircraft airline which has not grown.

LF Mar

Quarterly Summary

At the end of Q1-CY2015, IndiGo continued to be market leader with 36.6%, compared to 29.2% for the same period last year. Jet Airways – with focus now back on sustainable growth, cornered 24.6%, a number which will grow up as the re-jigged network starts showing results in April.

Q1 market share

The biggest decline came from Spicejet, due to its internal troubles. Go Air, with no addition in fleet has so far been able to hold on to its market share, however the going may get tough as competition adds capacity. The airline has time and again said that it looks to be profitable rather than aim for market share, but with resurgent Jet Airways, ever expanding IndiGo and cautious Spicejet – all aiming at growing, it could well come at the cost of Go Air.

This was the third full quarter for Air Asia and they closed at just 1.2%. As two aircraft are inducted in May, it would only be Q3-CY2015 that we would know how effective the airline which has made tall claims is.

I anticipate struggle for Air Costa without addition in capacity and frequent network changes, while Vistara will continue to struggle at the air fare and aircraft configuration. This next quarter could see heavy dilution of yields by Vistara as it tries to get foothold in the market.

LF Q1 OTP Q1

April Outlook

The capacity increase of Spicejet, which was to take place effective Summer Schedule (29th March) did not materialise and the airline now has three damp leased aircraft in its fleet for the peak schedule. However, Vistara, Jet Airways & IndiGo have added capacity in Summer Schedule which will translate into additional passenger numbers as well.

The battle of load factors will continue well into April & May – with the peak season this year could possibly see one of the airlines crossing 85% and being just shy of 90%, a good 5% above last May. With another round of sales, it could well be Spicejet who clocks highest load factor in May.

Air India had some capacity deployed for evacuation from Yemen, which could have resulted in some Cancellations & Combinations – pushing up load factors in April.

With no increase in capacity, Go Air could lose some of its share, while Air Costa has to now struggle with the biggies. What was expected to be a stable growth plan is looking like it has hit a roadblock, with no additional capacity being deployed and some new shorter routes being tried out.

 Summary

  • Stage set for Jet Airways for a solid comeback.
  • IndiGo needs to push itself harder on OTP and Load Factor
  • Spicejet getting back lost passengers
  • Go Air struggling to maintain Load factors and market share without capacity addition
  • Vistara needs to revisit everything – starting with pricing strategy
  • Air Asia operations moving towards being stable
  • Air Costa looks like its losing steam
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