Low-cost carriers come out in flying colours as market share, load factor turn buoyant

Mumbai: Despite having smaller fleet sizes, low-cost carriers (LCCs) like SpiceJet, IndiGo and GoAir have done exceedingly well in terms of market share and load factors during the financial year 2009-10, compared to their full service peers –– Air India, Jet Airways and Kingfisher Airlines, data from the directorate general of civil aviation has showed.
The LCCs’ market share for the year stood at around 34%, compared to full service carriers’ 57%, which is considered outstanding given the smaller fleet size and network.
For example, SpiceJet with a market share of 12% with 125 flights daily to 18 destinations, has adopted a 100% operating lease model. The carrier, rather than buying the aircraft, leases it for a fixed period of time. Full service carriers use the financial lease mode where they own aircraft and have higher incidence of depreciation and interest costs as compared to SpiceJet. “The operating lease model is believed to be better, as rentals on aircraft cost 10-11% of the total value of the aircraft annually.; Additionally, these contracts are highly flexible and short-term in nature,” says an analyst.
GoAir, which has a 5.9% market share, also had one of the lowest cancellation rates, and improved on-time performance, which has helped the carrier maintain healthy growth.
26/05/10 Shaheen Mansuri/Financial Express

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Categories: Low Cost General May 2010