Thursday, July 20, 2023

Indigo’s near two-thirds market share is worrying, but can’t fault the airline

India’s domestic air traffic surpassed the pre-COVID level a few months ago, quite like in many other sectors of the country’s economy. Even as the rise has been steady, negative events like the suspension of flights by Go First and the consistently dwindling market share of SpiceJet haven’t adversely impacted the industry. This has been largely due to one airline — Indigo.

Indigo’s market share has been rising month after month because it has been able to augment capacity, and operate additional flights, whenever and wherever required. Indigo’s story, ever since its inception in 2006, has been the envy of many successful airlines, not just in India, but globally.

Let’s look at some of the high points.

Indigo got its 100th aircraft in 2014, 200th aircraft in 2018 and now has a fleet of over 300 aircraft with many more to be added in the coming years. It flew over one million passengers in 2007, surpassed the 10 million passengers milestone in 2009 and flew 50 million passengers in 2015. The airline plans to carry 100 million passengers in 2024. It earned the distinction of flying 1,000 flights a day in 2017. The airline has, after becoming the largest Indian domestic player in terms of market share in 2011, held on to this coveted position.

This is in sharp contrast to other airlines — Air India, Jet Airways, Kingfisher Airlines, SpiceJet — which after being among the top two, at some stage or the other, have subsequently floundered.

While Indigo has steadily developed its market share by expanding its network and fleet, it has also successfully exploited growth opportunities, whenever another airline has collapsed. In fiscal 2012-13, when Kingfisher ceased operations and all carriers were vying to fill the space, Indigo increased its market share from 20 percent to 27 percent. Similarly, when Jet Airways exited the market in 2019, the airline witnessed a quantum jump. More recently, when Go First suspended flights effective May 3, 2023, Indigo led other airlines in augmenting capacity, flying on routes vacated by Go First. Result: Indigo’s market share breached the 60 percent mark — 61.4 percent in May 2023 and 63.2 percent in June 2023.

With the Tata-owned airlines — Air India, Vistara and Air Asia — collectively accounting for another 25.8 percent market share, these airlines and Indigo achieved a 90 percent market share between them in June 2023. This has, for the first time, led industry analysts to talk of the likely scenario of a duopoly in the Indian market soon. If Indigo and Tata group airlines have gained because other airlines — with the exception of Akasa airline, which also has been increasing its market share — have failed, can the gaining airlines be faulted?

20/07/2023 Moneycontrol

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


Post a Comment