Wednesday, October 19, 2016

September 2016: Performance of Indian carriers in domestic aviation market

by Soumen Mukherjee

Airlines in India together carried a total of 82.30 lakh (8.23 million) passengers in the domestic sector in September 2016. Continuing its dream run with above 20% year on year growth rate, the domestic aviation sector had handled 726.98 lakh passengers with 23.17% YoY growth during first nine month (January-September) of 2016 over the same period a year ago. While the MoM growth rate for the month of August was at 23.46%. Going by the passenger growth trend of the first three quarters of 2016 and the planned capacity expansion during the fourth quarter of 2016 (LCCs like IndiGo, GoAir and FSC like Vistara), it remains only matter of time that domestic aviation sector in India to record 100 million annual passenger for the first time in 2016. 





After flirting with 38-39% market share for some months, IndiGo finally grabs 40% share of India's domestic aviation market. And the gap between number one IndiGo and number two Jet is ever widening with Jet Airways group reduced down to below 19%; This huge lead of IndiGo over others is something that used to exist in Indian market before the arrival of low-cost carriers in early 2000s when there were only two-three players operating.  IndiGo's market share is now equivalent to the combined market share of Jet Airways, Air India and GoAir (41.6%).

Vistara once again regained the the top position in on-time performance chart for the month of September. The Tata Singapore Airlines joint venture airlines has been on the number one OTP position for most of its 21 months operations but had lately slipped in last two months. SpiceJet which came second in terms of OPT in September 2016 have indeed improved its on-time performance in recent times. But it was surprising to see it involved into bitter rhetoric to claim its superiority in July 2016 disregarding the relatively smaller size of operation of Vistara which was the actual leader. In that way, IndiGo the largest of all airlines in India will simply ignore all other airlines.
If not, OTP then its passenger load factor (PLF) where SpiceJet has established its indisputable leadership for the last 17 months. The second largest low cost carrier is flying its planes more than 90% full since May 2015. Vistara which has struggled to fill its aircraft from its inception has marginally improved its PLF to over 72% and the newest regional airline Air Carnival has replaced it from the bottom position. 

6 comments:

  1. It is very encouraging sign for Indian aviation to see such stable growth. The need of the hour is 20 seat aircraft. Perhaps HAL is the only company with ample opportunities, yet lack that vision or infrastructure to go ahead and pursue. They could market and get several orders for Dornier Do 228NG which they can build with license. Do you think such small aircraft make several lean routes viable to start with?

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    Replies
    1. Though many analysts were skeptical about domestic sector continuing with 20% growth in 2016 similar to 2015. I was really very bullish about this prospect. Oil price is at historical low and airlines are carry-forwarding the benefits to passengers which is believed to be the main driver of the phenomenal passenger growth in India.

      I don't see HAL coming up with indigenous civilian aircraft in next 10 years but licence production of Dornier has good potential provided it suits Air India's business plan. Moreover Mahindra likely to start promoting its own sub 20 seater turboprops which will be manufactured in India.

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  2. What's your view on Air Carnival? How do you think they would succeed in the Market?

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