20% more passengers fly in April, as IndiGo corners 37.8% market

The air traffic in India continued its upward journey growing at a phenomenal pace for fourth consecutive month recording a Y-o-Y growth of 21.8% and M-o-M growth of 23.3%. A total of 65.59 lakh passengers travelled on domestic flights this April, as per the data published by Directorate General of Civil Aviation.

The month had started with Air India’s massive operation of evacuation of Indians and then foreign nationals from Yemen and ended with another massive operation by Air India, Spicejet, IndiGo and Jet Airways of evacuation from Nepal post the devastating Earthquake.

As this blog had predicted last month, capacity addition by Spicejet has translated into an increase in its market share. However, that has also come at the back of industry leading load factor at 88.7%. The load factor would have partially grown because it had opened many flights for sale in Summer schedule and had later cancelled and combined few of them, as it waited for the damp leased aircraft which joined in later half of April. The biggest surprise was the slide IndiGo has seen in its much touted On Time Performance (OTP) recording a second lowest OTP of 79.1%. Vistara continues to struggle at 67.3% load factor – the lowest in the industry.

The market is now more skewed in favour of IndiGo, which climbed to a market share of 37.8% after a momentary slump in March. Air India continues its slide, with market share now down to 16.2%. Vistara, with lower load factors, has over taken Air Asia India on the market share front, which after almost a year of operations is at 1.1% compared to 1.2% of Vistara.

The regulator started declaring OTP results for all the airlines from this month and the charts were led by Air Asia India at a perfect 100% OTP. However, the airline operated flights only from Bengaluru for the month of April.

Vistara also managed to fill up its planes more than before, thanks to its ever changing revenue management / pricing strategy with fares being dropped to below LCC levels on many routes and flights. Slowly, it has dawned upon the airline that the battle in Indian skies is always about fares and premium rarely comes for product but always for timings.

On Time Performance (OTP)

While reviewing the monthly performance in March, I had written how Jet Airways is neck to neck with IndiGo after sustained efforts. However April saw them sneak past by a narrow margin. For an airline which has been the pioneer of On Time Performance rankings in the country – April surely brought some disaster. Probably they need to revisit their rotations which they launched in Summer schedule to get back the title of “OTP Kings” which Vistara is now claiming.

OTP - Metro Airports Apr 2015

Air Asia – after some disastrous months had an outstanding performance at Bengaluru, its hub and ended the month with an OTP of 100%. This comes at the back of some empty morning and evening slots owning to pulling out of Bengaluru – Chennai route. Vistara too continued with its exceptional performance on the OTP front.

While Spicejet performed exceptionally on the Load Factor front, a lot still needs to be achieved on the OTP front, as it ended at the bottom of the charts for one more month. Clocking OTP of 74.8%.

Overall, the industry saw a downward trend in OTP for April 2015 over April 2014. The below charts show some interesting numbers at four major airports.

YoY OTP changeGovernment’s intervention in improvement of Air India’s OTP has yielded results as the airline improved its performance by leaps and bounds from what it was a dismal 52% in January to a respectable  79.4% now.

A real test for both Vistara and Air Asia India will be in the month of July – when the airlines will have a full month of tight rotations, fully utilized planes and the monsoons.

Market share & Loads

Every airline except Air Costa saw growth in Passenger Load Factor over last April and took their pie from the growing passenger numbers. Spicejet had a load factor of 88.7%, which is 15.4% more than previous April. However, this is also due to the substantial decrease in capacity since last April, which shows in the overall market share, which now is back to double digits. The airline now has a market share of 10.8% compared to 17.9% last April.

Apr 2015 MS

IndiGo’s dominance of the market continues and the airline now corners 37.8% of the market, a growth of 6.2% over last April. Every other airline has lost market share since last

April. The slow yet steady slide of Go Air, as predicted here in its last edition, continues. The airline has lost 0.7% over last Apairline wise LF apr 2015ril, due to lack of capacity. IndiGo’s increased market share came on the back of a robust load factor of 85.7%.

Air Asia India, which started operations from Delhi in May, was in bottom two – with a load factor of 74.4%, better only to Vistara which recorded its best every yet lower load factor of 67.3%. Incidentally Tata group is an equity partner in both these airlines.

The gain for IndiGo has come from some of its inductions at the beginning of Summer schedule. These, specially on the Mumbai – Raipur – Mumbai sector had very little competition, which would have helped it gain on the load factor and thus on the market share.

market share variance yoy apr 2015 Load Factor improvement YoY April 2015

May Outlook

May is one of the peak months for the airlines and travel industry as a whole. I continue to predict very high loads for the month of May and another 20% + growth month. Air Asia’s launch of Delhi operations will be the highlight of the month. IndiGo has started two new rotations early in May which will also translate into some additional passengers. Jet Airways has tweaked its network further post Summer schedule which will not increase loads but will increase yields for the airline.

While reviewing the market for February (Over 20% more pax fly this February, IndiGo widens the lead) I had predicted that IndiGo could well get 40% market share in May. With the slump it had in March, this looks difficult. The airline has also not added capacity for a long time. The airline could just be short of that number.

The second prediction was in March (Jet Airways leads fight back against IndiGo in March as market continues to grow at 20%) where I have predicted that this May could see one of the airlines breach the 90% mark in Load Factors and that airline could well be Spicejet. With a load factor of 88.7%, I continue to feel that the airline indeed would make the cut.

Air Costa has not been able to cash in on the traffic rush and it needs to be seen how the frequent network changes help the airline get more loads. Go Air, has had some cancellations in April, which was the reason for its higher load factors. There could be some operational hiccups due to shortage of cockpit crew and lead to reduction in market share.

Vistara, which has launched additional flights will see load factor climb up as it is reducing fares and matching it with the industry.

Overall, May looks to be another bumper month in terms of market growth.

Airline Summary

  • Spicejet could record highest load factor in May
  • IndiGo will have to get back to basics and come on top on the OTP front
  • Jet Airways – so near yet so far situation on the domestic front
  • Vistara – the focus is now on loads, sometime soon it will have to go back to yields and premium
  • Air Asia – Delhi will be a tougher market but it is a bigger market. Even a trickle of the large pie will help sustain two aircraft
  • Air Costa – So far untouched on the shorter routes, frequent network changes are not helping
  • Go Air – Market share could go down due to operational issues

 LF1

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