Tuesday, May 04, 2021

SpiceJet reduces passenger fleet capacity; IndiGo expands

The Indian aviation sector once again bore the brunt of COVID after regional lockdowns following the resurgence of the virus in the country led to a decline in passenger traffic for the first time in April in 2021.

As a result, airlines have now turned to the government for a bailout. They have also demanded a reduction in the capacity cap from 80 percent currently to 60 percent and increase the lower fair limit.

Apart from reducing demand, the airlines are also hit by the rise in operational cost due to the fall in rupee. The rupee is currently hovering around Rs 74.07 per US dollar. It has directly harmed the airlines as a large part of airline expenses are in dollars. Besides, the Ministry of Civil Aviation has continued to cap the fares of domestic flights till May 31, 2021 which has further added to their woes.

In the current scenario, a strong trend of consolidation is shaping up in the industry with financially strong airlines making headway in the market. On the other hand, the players with limited capacities are being forced to curtail their operations or divert them.

The airline has also run into trouble with lessors and at least two of the lessors have sent notice for grounding of 10 planes to SpiceJet. As per the report, SpiceJet has reduced its overall fleet by 13 planes to 103 planes by December 2020. With grounding notice for 10 planes, the fleet size is expected to reduce in the March quarter as well.

While SpiceJet is constantly decreasing its passenger fleet, it has grown its freighter fleet to 18 planes from just 1 plane in FY19. It is an indication of the company moving in direction of the current trend which requires more cargo facilities onboard for the supply of oxygen and other medical equipment. With 18 planes, freighters now contribute to 17.5 percent of SpiceJet's fleet.

While SpiceJet has focused on growing its freight fleet, no such diversion has been observed with other airlines. GoAir has continued to maintain its passenger fleet while IndiGo has expanded during this time.

IndiGo has added 9 A321-NEO planes to its passenger fleet post-December 2020. Overall, IndiGo has added 45 NEO planes in the last year and gradually replaced 320 CEO planes.

04/05/21 Vaibhav Agarwal/Moneycontrol

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