Amid intense competition, Jet Airways is expected to perform better than SpiceJet due to its increasing market share in international traffic. The entry of two new airlines -Vistara and AirAsia - has changed the business dynamics in local aviation. After low cost carriers (LCCs), these airlines have brought in a fresh wave of competition for Jet in the domestic markets.
Even today, LCCs hold 63 per cent share of the domestic market.In such an environment, SpiceJet, which had to cut capacity to slash costs, has lost significant market share in the past year - from 19 per cent in the quarter of June 2014 to 9.4 per cent at the end of March.
The company's profit of Rs 22.5 crore can be attributed more to cost cuts than on its ability to attract more travelers. The fleet size of the airline has come down from 53 to 35. Once SpiceJet returns to full capacity , the industry capacity, including those of the new airlines, would rise 1215 per cent in FY17. This would fuel competition and test the pricing power of airlines, making the near-term outlook for SpiceJet challenging.
05/06/15 Palak Shah/Economic Times
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Even today, LCCs hold 63 per cent share of the domestic market.In such an environment, SpiceJet, which had to cut capacity to slash costs, has lost significant market share in the past year - from 19 per cent in the quarter of June 2014 to 9.4 per cent at the end of March.
The company's profit of Rs 22.5 crore can be attributed more to cost cuts than on its ability to attract more travelers. The fleet size of the airline has come down from 53 to 35. Once SpiceJet returns to full capacity , the industry capacity, including those of the new airlines, would rise 1215 per cent in FY17. This would fuel competition and test the pricing power of airlines, making the near-term outlook for SpiceJet challenging.
05/06/15 Palak Shah/Economic Times
