Comeback kid: Air India retains No 2 spot after IndiGo

Air India continues to regain market share and is a clear No 2 right now. Is it doing something right or is it just the short-term effect of fare cuts?

Sindhu Bhattacharya December 20, 2014 13:59:34 IST
Comeback kid: Air India retains No 2 spot after IndiGo

New Delhi: Air India must have done some things right in the last three-four months. Not only is it the only airline apart from market leader IndiGo to show a growth in passenger traffic this October, its on-time performance has been the best so far this year.

In October, Air India has been able to fill three-fourths of its aircraft, just like IndiGo, enabling it to achieve the highest seat factor in the domestic aviation industry.

Compare this with erstwhile market leader Jet Airways, which has seen market share plummet to 18 percent from 22 percent in February this year, and a seat factor of 67.5 percent, which is the lowest among all scheduled carriers.

It has seen a steady decline in the number of passengers carried month on month (though this number was higher for October compared to September after a continuous decline in the previous four months).

Comeback kid Air India retains No 2 spot after IndiGo

In October, Air India has been able to fill three-fourths of its aircraft, just like IndiGo, enabling it to achieve the highest seat factor in the domestic aviation industry. Reuters

So what is Air India doing right? A top airline official told Firstpost that the carrier has been focusing on improving its on-time performance (OTP), which is the best ever at 84 percent in October. "It would have been over 90 percent but, being the national carrier, we need to fly to routes like the North East where the weather is often bad and flights get delayed. This brings down our overall OTP".

Another senior Air India official said that when all other private airlines together flew almost 5 percent less passengers in October, AI saw an increase of 10 percent year on year.

Even on the question of yields (revenue per passenger) Air India has seen robust growth, with yields in October alone up by about 10 percent. The official quoted earlier said November should have been even better than October, but the first 19 days of the month have not shown much growth over October in terms of either passenger traffic or yields.

The overall domestic aviation market shrank 15 percent in October and, therefore, Air India's growth in a shrinking market is all the more noteworthy, this official pointed out.

According to data released by aviation regulator DGCA, Air India has a market share of 20.8 percent, which means one in five domestic passengers now flies Air India. Jet Airways' share has shrunk to 18.1 percent. IndiGo remains the king at 27.8 percent, while SpiceJet registered 19.1 percent, JetLite 6.6 percent and Go Air 7.6 percent.

During October, Air India carried 51,000 more passengers compared to 8,98,000 carried in October last year, despite the total passenger flown in October this year falling by 15.7 percent. During October, Jet Airways' market grew by 0.9 percentage points and IndiGo and SpiceJet grew at 0.6 percentage points each. Around 4.5 million passengers flew in October compared to 5.4 million passengers who flew in October last year.

If Air India and IndiGo are the only two airlines showing growth in a declining market, what does the future of domestic Indian aviation look like?

An industry expert says that with aviation fuel costs and airport charges remaining high, unless airlines are able to take frequent fare increases, the situation will remain grim. Already, Air India has reacted to competition by announcing a three-day special fare sale with extremely low one-way fares on certain routes for the non-peak season on advance bookings.

If the market remains subdued, these short bursts of fare cuts could become a permanent feature, hurting airline bottomlines further.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

No plans to take foreign partner on-board: IndiGo
Business

No plans to take foreign partner on-board: IndiGo

The airline has ruled out any downward revision in fares following the two full service carriers-Air India and Jet Airways-announcing special promotional rates.

IndiGo owner says terms for 250-jet Airbus order have expired but talks are on
Business

IndiGo owner says terms for 250-jet Airbus order have expired but talks are on

Budget airline Indigo, India's biggest carrier by market share, signed a provisional order for 250 A320net jets from Airbus in October, handing the European planemaker's its biggest-ever potential order.

Focus on passenger safety, work as cohesive force: Air India CMD to employees
Business

Focus on passenger safety, work as cohesive force: Air India CMD to employees

Lohani, who recently took over as the chairman and managing director of the government-run airline, in a letter to the 27,000 employees today, said Air India is a brand, which needs to be revived with concerted efforts from all.