Updated December 18th, 2023 at 20:07 IST

IndiGo's market share dips in November amid surging air passenger traffic

Despite overall industry growth, IndiGo saw a second consecutive monthly decline in market share, data from Directorate General of Civil Aviation (DGCA) showed

Reported by: Abhishek Vasudev
IndiGo | Image:IndiGo
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IndiGo, the country’s largest airline, witnessed a second consecutive dip in market share in November, but maintained its market share above 60 per cent. The airline has been ruling the Indian skies with monopoly on the back of its consistent on-time performance and competitive pricing.

The surge in market share follows the grounding of GoFirst due to voluntary insolvency, creating a void that IndiGo had opportunistically filled.

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Meanwhile, problems faced by Akasa Air and SpiceJet also led to higher demand for IndiGo flights earlier this year, analysts said.

In August, Akasa Air witnessed pilot exits, which saw around 43 pilots leave without serving notice, prompting the cancellation of 18 per cent of its monthly flights. SpiceJet found itself entangled in financial woes, with GASL Ireland and VS MSN securing a summary judgment of $15 million against the airline in the London High Court. This adds to SpiceJet's mounting legal challenges, as three more cases have surfaced in the commercial courts in London.

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However, SpiceJet’s plans to raise Rs 2,250 crore by selling shares and warrants to help revive its grounded planes that continue to weigh on the cash-starved low-cost carrier's financial results has provided a glimmer of hope to the aviation industry.

Meanwhile, air passenger traffic witnessed 9 per cent annual growth in November domestic air passenger traffic to 1.27 crore, reflecting a steady recovery above pre-COVID levels.

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Despite overall industry growth, IndiGo saw a second consecutive monthly decline in market share, data from Directorate General of Civil Aviation (DGCA) showed. Passenger Load Factor (PLF), a metric used in the airline industry that measures the percentage of available seating capacity that has been filled with passengers, for most airlines saw a monthly increase, hitting an average of 83.1 per cent, Motilal Oswal said.

However, IndiGo's PLF stood at 85.6 per cent, down 130 basis points YoY. On-time Performance (OTP) across airlines fell to 67.1 per cent in November, with IndiGo registering a 77.5 per cent OTP, down approximately 15 percentage points from the same month last year.

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IndiGo's market dominance, surpassing 60 per cent following the collapse of GoFirst in May 2023, has encountered headwinds. In November, the airline’s market share dipped to 61.8 per cent, down 618 basis points annually. The airline's grounded aircraft increased to the mid-40s in the second quarter, with an anticipated additional 35 aircraft recalls by Pratt & Whitney (P&W) in 4QFY24.

In terms of passenger numbers, IndiGo served 78.8 lakh passengers, up 21 per cent annually, while Air India group carried 34.9 lakh passengers, marking an annual 10 per cent increase. Akasa and SpiceJet reported varying trends, with Akasa showing substantial growth at 5.4 lakh passengers, up 2.6 times annually and SpiceJet facing a 29 per cent annual decline at 6.2 lakh passengers.

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Fuel dynamics also played a key role, with air turbine fuel (ATF) prices for December 2023 down 5 per cent month on month (MoM), but the quarter till date reflecting a 14 per cent sequential increase.

IndiGo, responding to rising fuel costs, introduced a fuel surcharge ranging from Rs 300-1,000 on airfares, citing the indispensability of ATF costs, which constitute 40 per cent of the ticket price.

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In the broader industry context, domestic PLF stood at 83.1 per cent, down 460 basis points YoY but up 140 basis points MoM. Average OTP for the top four airports declined to 67.1 per cent, down 530 basis points YoY.

As the aviation sector navigates through challenges, IndiGo's strategies to address grounded aircraft and adapt to market dynamics will be closely watched in the coming months, analysts at brokerage firm Motilal Oswal said.
 

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Published December 18th, 2023 at 16:43 IST