Tuesday, November 28, 2017

India's air travelers ascend to monthly record

The Indian air travel market is growing dramatically, with such low-cost players as IndiGo and SpiceJet aggressively expanding service networks and fleets.

Travelers flying domestic routes in India reached a monthly record of 10.5 million in October, up 21% from a year earlier.

IndiGo, the largest budget carrier in the country, will expand service to three regional cities this December, said Aditya Ghosh, president of IndiGo operator InterGlobe Aviation. The company hopes to introduce reliable, efficient travel to regions where people now pay exorbitant fares for undependable service, Ghosh said.

IndiGo has enjoyed stellar earnings. July-September net profit roughly quadrupled on the year to 5.5 billion rupees ($85 million), thanks partly to compensation received for delayed aircraft delivery. Revenue for the quarter rose 27% to 55 billion rupees.

The company added six aircraft in the July-September quarter, bringing its fleet to 141 as of September's end -- up about 20%, or 23, on the year and lifting transportation capacity by 13%. Daily flights could reach 1,000 as early as this year.

Increased fares helped lift per-passenger revenue per kilometer by 9% on the year. The overall occupancy rate climbed 1.8 percentage points to 84%. IndiGo's share in the domestic flight market increased 0.7 point on the year to 39.6% in the January-October period, according to the Directorate General of Civil Aviation.

The reliability of IndiGo, launched in 2006, disrupted a market rife with delays and cancellations. Its female cabin crew's uniform, featuring a short dress, a bob hairstyle wig and a hat, also created buzz in the culturally conservative nation. The company quickly became the market leader.

Third-ranked Indian low-cost carrier SpiceJet's net profit jumped 78% to a record of just over 1 billion rupees for the quarter ended September. Seat occupancy rates remain No. 1 in the industry, recording 30 consecutive months above 90%. The airline is expanding service to locations including Assam in the northeast.

The company is working in sync with the government's UDAN initiative to bring air service to newly opened airports in smaller cities.
Over the years, many airlines have emerged in India in anticipation of robust economic growth backed by a rising population. As available seats have increased faster than demand, fares have dropped. And less-competitive carriers have vanished.

Air Costa and Air Pegasus, which focused on certain areas of the country, halted flights over funding and other challenges. Kingfisher Airlines, under brewery group Kingfisher, collapsed without a single year in the black.

Meanwhile, top three budget carriers IndiGo, SpiceJet and GoAir have seen their combined market share climb into the 60s over the past three years.

Air India generated its first operating profit in a decade in fiscal 2015 but continues to struggle with its debt burden, unable to lower operating costs. The government approved in principle this past June the sale of the company and subsidiaries to the private sector. With IndiGo showing interest, an industry reorganization may follow if the state-owned airline group is indeed sold.

With a round of intense competition running its course, Indian airlines' aggregate net balance turned to the black for the first time in a decade in fiscal 2016, according to the Australia-based CAPA - Center for Aviation.
28/11/17 Akira Hayakawa/Nikkei Asian Review