Sunday, July 09, 2023

Aviation may attract big corporate houses if high airfares persist

New Delhi: If at all high airfares is a multi-year phenomena then high return ratios is likely to attract other big corporate houses with deeper pockets to this low entry barrier sector, JM Financial said in a research.

Akasa Air garnered 5 per cent market share in a year, the report said.

Sudden bankruptcy filing by Go First (6.4 per cent market share and a fleet of 26 airworthy place) in May earlier this year has significantly benefited the existing players by a) making room for a sharp fare increase (18 per cent QoQ, as per the JM fare tracker) ; and b) enabling record PLFs of 90 per cent plus.

Muted ATF price (down 13.7 per cent QoQ) coupled with a stable INR has further boosted profitability prospects for the sector.

The key question lingering in the minds of sector enthusiasts is whether or not to extrapolate this highly profitable period for a year or two, attributing it to the benefits associated with a duopoly market, the report said.

The marginal players (SpiceJet 5.4 per cent /Akasa 4.8 per cent market share) will also see significant balance sheet improvement in this extraordinarily profitable period, giving them the wherewithal to withstand sector cyclicality in future.

The TATA group currently stands at 26.3 per cent domestic market share and intends to take its share sharply higher with its new gigantic fleet order, the report said.

Post Air India’s order for 470 aircraft with Boeing and Airbus (options to purchase additional 370 aircraft), IndiGo has placed an order for 500 Airbus A320 family single aisle aircraft.

This order comes in addition to the current order book of 480 aircraft which are yet to be delivered (expected to be completed by 2030). It will provide IndiGo a further steady stream of deliveries between 2030 and 2035.

Akasa Air has also placed an additional order for four aircrafts a follow-up to the already placed order of 72 aircraft. The company also plans to place a three-digit aircraft order before the end of the calendar year, the report said.

Airport infrastructure is likely to come in at a quicker pace ensuring supply. India is poised for substantial growth in its aviation infrastructure, with the Union Civil Aviation Minister, Jyotiraditya Scindia, announcing plans to increase total airports to 200-220 from 148 by FY25.

09/07/2023 IANS/Daijiworld

To Read the News in full at Source, Click the Headline


Post a Comment