Despite the grounding of Jet Airways, the competition to increase capacity among Indian carriers may end up hurting the already bleeding aviation sector, though it will help fliers with some cheaper tickets.
Also, the ongoing lean season is expected to make things more difficult for the airlines.
Ajay Singh-promoted SpiceJet, which made a dramatic turnaround a few years back, has gained market share by 80 basis points (month on month) to 15.6% in June, reveals the analysis by research firm IndiaNivesh. Market leader IndiGo, on the other hand, lost market share by 90 bps during the same time to 48%. Likewise, national carrier Air India, which is on the divestment block, has lost 60 bps to 13% while Vistara gained 60 bps at 5.4%. "We believe SpiceJet will get aggressive to gain market share. This could lead to a price war and add pressure in the 0-15 days booking period," said a report by analyst Mayur Milak of IndiaNivesh.
According to equity research firm Edelweiss, IndiGo's passenger growth continued to be in excess of 20% with a surge in international growth offsetting a slight slowdown in the domestic market. "However, we estimate sharply lower yields quarter on quarter in the second quarter of this fiscal—a seasonally weak quarter and with Jet Airways' vacated capacity being filled by other airlines," a report by Edelweiss claims. According to research analyst Ansuman Deb of ICICI Securities, there is currently a trend of lower fares in the 0-15 day booking window and this is expected to add some pressure to unit revenues in the second quarter. The IndiGo management in its recent analyst call has admitted to feeling the pressure in the 0-15 day period and cautioned that yields have started moderating.
The airlines have already made their intentions clear about capacity additions despite the apparent ongoing slowdown in the economy. For example, while IndiGo announced that it expected to increase capacity by 30% for this fiscal, rival SpiceJet is looking to add 80% more during the same period. Aviation consultancy firm CAPA in June said that the three carriers, SpiceJet, Air Vistara and AirAsia, are accelerating fleet expansion by 51-66 aircraft above their original plane addition for fiscal 2020, out of which SpiceJet alone accounts for 30-40.
23/07/19 DNA
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Also, the ongoing lean season is expected to make things more difficult for the airlines.
Ajay Singh-promoted SpiceJet, which made a dramatic turnaround a few years back, has gained market share by 80 basis points (month on month) to 15.6% in June, reveals the analysis by research firm IndiaNivesh. Market leader IndiGo, on the other hand, lost market share by 90 bps during the same time to 48%. Likewise, national carrier Air India, which is on the divestment block, has lost 60 bps to 13% while Vistara gained 60 bps at 5.4%. "We believe SpiceJet will get aggressive to gain market share. This could lead to a price war and add pressure in the 0-15 days booking period," said a report by analyst Mayur Milak of IndiaNivesh.
According to equity research firm Edelweiss, IndiGo's passenger growth continued to be in excess of 20% with a surge in international growth offsetting a slight slowdown in the domestic market. "However, we estimate sharply lower yields quarter on quarter in the second quarter of this fiscal—a seasonally weak quarter and with Jet Airways' vacated capacity being filled by other airlines," a report by Edelweiss claims. According to research analyst Ansuman Deb of ICICI Securities, there is currently a trend of lower fares in the 0-15 day booking window and this is expected to add some pressure to unit revenues in the second quarter. The IndiGo management in its recent analyst call has admitted to feeling the pressure in the 0-15 day period and cautioned that yields have started moderating.
The airlines have already made their intentions clear about capacity additions despite the apparent ongoing slowdown in the economy. For example, while IndiGo announced that it expected to increase capacity by 30% for this fiscal, rival SpiceJet is looking to add 80% more during the same period. Aviation consultancy firm CAPA in June said that the three carriers, SpiceJet, Air Vistara and AirAsia, are accelerating fleet expansion by 51-66 aircraft above their original plane addition for fiscal 2020, out of which SpiceJet alone accounts for 30-40.
23/07/19 DNA
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