Tuesday, May 24, 2016

April 2016: Performances of Indian carriers in domestic aviation market

by Soumen Mukherjee
Airlines in India together carried a total of 79.32 lakh (7.93 million) passengers in the domestic sector in March 2016. Continuing its dream run with above 20% year on year growth rate, the domestic aviation sector had handled 309.35 lakh passengers with 23.22% growth during January-April 2016 over the same period a year ago. While the MoM growth rate for the month of April was at 20.93%. Going by the planned increase in capacity in the coming months (LCCs like IndiGo, GoAir and FSC like Vistara) it would be interesting to see whether 2016 becomes the year when domestic sector in India reaches the mark of 100 million annual passengers for the first time.
While IndiGo maintained and further consolidated its top position in terms of domestic market share Jet Airways reported a decrease in both market share and passenger volume. SpiceJet continued to outperform others in terms of load factors with above 90% PLF for 12 straight months but Vistara slipped from the top position in the on-time performance charts after 8 straight months. Among the highlights all airlines except Air Costa and Jet Airways had increased their Available Seat Kilometers (ASKM), and number of passenger carried compared to that of April 2015.
Among the ‘old’ airlines SpiceJet continued to record the highest MoM growth in terms of passenger volume as it had drastically reduced the capacity in early 2015 following December 2014 financial crisis. SpiceJet carried more than million monthly passengers for the second consecutive months. IndiGo, the market leader in passenger volume recorded more than 23.6% MoM growth in its April 2016 passenger volume, carried 30.67 lakhs passengers which is all time high monthly passengers carried by an Indian airline in the domestic sector. Jet Airways group, the second largest carrier in the domestic sector had recorded a marginal decrease in its passenger numbers for the months of April after reporting zero passenger growth in March 2016, this can be attributed to Jet Airways's move to divert domestic capacity to the international sectors. GoAir, the most low profile airline among the ‘old’ airlines had recorded more than 17% MoM growth with 6.67 lakhs passengers in April 2016. GoAir is expected to report an even higher growth rate in its passenger numbers in the coming months as it undergoes fleet expansion from the second half of 2016.

Vistara beats AirAsia India in terms of monthly passenger numbers in April and becomes the largest carrier among the ‘new’ airlines outside FIA and Air India. Vistara had carried 1.83 lakhs passengers while AirAsia India had carried 1.67 lakhs passengers in April 2016. With 59 thousands in April 2016 Air Costa’s passenger numbers had almost reached its April 2015 level owing to a third E-190 aircraft added to the fleet, although the airline is yet to achieve its lifetime high of 71 thousands passengers in December 2014. Among the two turbo-props only regional airline Hyderabad based TruJet continued to outperform its Bengaluru based neighbour Air Pegasus. While TruJet had carried 33 thousands passengers, Air Pegasus lags behind with 20 thousands passengers in April 2016.

IndiGo, the largest carrier in the domestic sector, has further consolidated its leadership position with 38.7% market share in April 2016 which is one percentage point higher than that of April 2015 but still IndiGo is short off its lifetime high market share of 38.9% which it had recorded back in May 2015; Jet Group as expected came second with 18.9% (combined market share of Jet Airways and Jet Lite) but it is down more than 4 percentage point than its April 2015 (23.1%) market share. The gap in market share between No.1 IndiGo and No. 2 Jet Airways is steadily increasing month by month, and it is almost 20% in April 2016 which points to a massive lead of IndiGo above its nearest competitor in the domestic sector. 1 IndiGo and No. 2 jet Airways; National carrier Air India had managed to retain above 15% market share, a base it broke earlier in February. Although it lost 1% market share if we compare it with that of April 2015. Among the 'old' airline, SpiceJet had considerably improved its market share on YoY basis. It is once again coming close to Air India and becoming a potential contender for the third position, SpiceJet had already achieved third largest market share back in summer 2014 but following its December 2014 financial crisis its market share went down sharply. In April 2016, SpiceJet recorded 12.9% market share compared to 15.1% of Air India, although it will not be easy to close the roughly 2 percentage point gap given the large passenger base. It will be  interesting to whether SpiceJet can actually capture higher marker share than Air India in the coming months with its seasonal capacity growth by wet-leasing aircraft. GoAir achieved a steady 8.5% market share in April 2016 although it is less than its April 2015 market share of 8.8%;

Among the ‘new’ carriers all but Air Costa have increased their market share in April 2016. While AirAsia India and Vistara both have more than doubled their April 2015 passenger volumes with 131% MoM growth. Air Pegasus has captured 0.3% market share which completed its one year of operation 12 April 2016 although its MoM growth rate not available as DGCA had not provided April 2015 passenger data of Air Pegasus. TruJet, the only airline to commence in last 12 months has captured 0.4% market share in April 2016.

On the OTP (on-time performance) front April showed a massive change in the leader board. Vistara, which had continued to be on the top position for eight straight months, slipped to third position. Significantly, the airline had increased its average fleet utilization from the summer schedule which starts from April (full month), therefore it appeared that the higher utilization lead to the drop in OTP although one senior executive of the airline had attributed it to ATC congestion at Delhi, Mumbai and Goa airports in the first part of April. While IndiGo had maintained its second position with a impressive OTP of more than 88% despite it operating a much larger operation with a fleet of more than 100 aircraft. But surprisingly, AirAsia India emerged as the new leader (another Tata led airline) of OTP, the airline had earlier performed very poorly in the winter months owing to fog issues in Delhi, Guwahati and Imphal airports. It would be interesting to know whether the meteoric rise from the bottom to top in the OTP list had anything to do with the leadership change in the airline. GoAir and SpiceJet two airlines which have performed extremely well on the PLF front, have reported around 82% of their flights being on-time. Not surprisingly Air India occupied the bottom in terms of its on-time performance in April 2016 where it reported more than 20% of its flights operating late.

But on the PLF (passenger load factor) front there were no surprise as SpiceJet once again had topped the PLF chart with 93.2% in April 2016 with this SpiceJet had reported more than 90% PLF for 12 straight months. And it has become the king of loads in Indian domestic aviation sector. Thanks to their frequent 'sales', not just SpiceJet, all low-cost airlines have performed much better than their full-service competitors with top five positions being occupied by them. All three full-service carriers Air India, Jet Airways and Vistara have reported around 78% of their seats being occupied. As of April 2016, even with its lifetime best performance Vistara still at the bottom position in the PLF chart. 

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