IndiGo continues market leadership

Market share in May at 32% but loads have been declining in first five months compared with same period last year

IndiGo it retained its leadership position in domestic skies with 31.7 percent market share in May but its loads have been showing a declining trend in first five months in comparison to same period last year. In comparison Air India is showing growth in its occupancy on an year-on-year basis.

Domestic air traffic was up 5.4 percent in May compared to same month last year and airlines carried over six million passengers last month compared to 5.7 million passengers last May. Domestic airline capacity was up 7.5 percent on year-on-year basis and demand showed growth. May is peak season for travel coinciding with school and college holidays and the month showed the fastest growth in passengers in first five months.

IndiGo retained number one spot amongst domestic airlines followed by Jet Airways-Jet Konnect which secured 21 percent share and Air India with 18.6 percent share. IndiGo which is adding capacity Data from Directorate General of Civil Aviation shows only IndiGo and GoAir have added the market share since January at the expense of others. IndiGo's share increased 27.7 percent in January to 31.7 percent in May and GoAir share rose from 8.4 percent to 9.8 percent in same period. Market share of all other airlines declined.

In terms of loads however Air India fared better than the competition. The national carrier's load factor increased from 74.2 percent in last May to 79.5 percent last month. IndiGo had the highest load factors amongst all airlines (82 percent) last month. However IndiGo's load factor fell from 89 percent May 2013 to 82 percent last month.

Infact IndiGo's loads in January-May 2014 have been lower than its loads in Jan-May of the previous year. Over the same period Air India's loads have shown a growth on a year-on-year basis.

An industry source said one of the reason for fall in IndiGo's load factors is expansion in capacity and the airline added nine planes in last year. "One reason why we see Air India's loads better than IndiGo in certain months is because Air India flies planes with fewer seats. All of IndiGo's planes have 180 seats and SpiceJet Boeing 737s have 189 seats and both airlines carry more passengers per flight. Air India's planes have a business class seating and thus have fewer seats,'' he said.

IndiGo did not respond to an email query on topic.

"Drop in share is due to modest reduction in capacity vis a viz market capacity. SpiceJet load factors have shot up since earlier this year since we introduced the new network on March 30 and is now amongst the top,'' a SpiceJet spokesperson said.

"In April and May traffic has shown around 5 percent growth. This is an encouraging trend. This could be an early sign of revival in demand catalysed by flash sales and promotions,'' said Sharat Dhall, president of Yatra.com

Airline executives however remain cautious. "Unless we see some serious cost correction there will be no revival. Capacity continues to grow around 8-9 percent and demand is growing at 4-5 percent. The first half of June has been good for airlines but once schools and colleges re open the occupancy will tank,'' said a senior executive from private airline.