Two of the country’s largest low cost airlines – Indigo and SpiceJet – have managed to increase their market share in the domestic market at the expense of established full service carriers like Jet Airways and Air India. SpiceJet which went through a turbulent period since December 2014 has managed to recover the lost ground which has hit the other competitors.
The Ajay Singh led airline started FY16 with a 9% market share and then increased it to 13% at the end of the fiscal year. During the same time market leader Indigo also managed to increase its market share to 38% from the 35% on the back of higher aircraft utilization and the addition of new A320 Neo aircraft from Airbus.
“Lower-than industry growth rates in domestic market saw Jet Airways and Air India losing 5% and 1.7% market share, respectively, to IndiGo (gained 2%) and SpiceJet (gained 3% Y-o-Y) even as the newly launched carriers improved their share by 2%,” said Edelweiss in a report on the airline.
Mumbai-based full service airline Jet airways and government run airline Air India have lost market share in the domestic market as they could not compete with the low cost carriers as far as reducing the ticket prices are concerned.
“Full service carriers cannot match the ticket prices offered by the low cost players. Increased utilizations and capacity has also helped the low frills carriers,” said an aviation consultant.
Apart from the established players, new entrants like full service carrier Vistara and low cost carrier AirAsia also managed to register 2% gain each. Though both the airlines do not operate on a huge scale, they managed to wean away some customers from the established carriers.
“We expect Indigo and SpiceJet to continue to outperform industry growth and thereby further enhance market share going ahead. Ergo, these companies are expected to better their earnings going into FY17. Jet Airways should benefit from reduction in debt and cost rationalisation measures even as volume growth is expected to be muted in the near term,” added Santosh Hiredesai of Edelweiss in one of the reports.
Indigo Airlines did face some capacity constraints initially as the delivery of the A320 Neos got delayed in December last year. The low cost airline recovered once the delivery of the A320 Neo aircraft started from February.
SpiceJet on the other hand has increased the fleet size to 42 aircraft during the last fiscal year and is expected to order 100-150 aircraft from either Boeing or Airbus in the current fiscal year.
