IndiGo closing in on 40% market share, SpiceJet scripts remarkable turnaround

IndiGo and SpiceJet are the two rising stars of the domestic aviation market this calendar year, of course for entirely different reasons. According to DGCA data, IndiGo has been steadily increasing its share of domestic passengers. It began 2015 with a share of 36.4 percent of the domestic market but by May, had almost touched 39 percent. So four in 10 domestic flyers take an IndiGo flight every day now. SpiceJet, which began the year with just 9.4 percent share as it was going through a make-or-break transition, is now closing in on 12 percent of the market. The third low cost carriers (LCC) in the Indian market, GoAir, remains on an even keel by maintaining its share of the market close to 8.5-9 percent all of this year. Ditto for AirAsia India, the LCC newbie, which remains at 1.3 percent. The four LCCs now together account for almost two-thirds of the domestic market.[caption id=“attachment_1589529” align=“alignleft” width=“380”]  Going on a high. Agency[/caption] Who has been losing the domestic market? Jet Airways’ domestic network seems to have taken the worst hit during the five months under review - combined market share of Jet Airways and JetLite has fallen from 24.1 percent in January to just 21.5 percent now. So from accounting for every fourth passenger in January, the network now carries only every fifth domestic flyer. Jet turned into a full service airline network last December and it is obvious that the strategy does not seem to have worked wonders till now. Air India, the other full service carriers (FSC) besides Jet, has also loosened its hold on the domestic market, with market share falling from close to 19 percent at the beginning of the year to close to 16 percent now. The third FSC Vistara (which started operations this January) has seen a rapid increase in market share as it adds capacity but still accounts for just 1.3 percent of the domestic market (from 0.2 percent at the beginning of the year). So why are these LCCs IndiGO and SpiceJet forging ahead, leaving competitors behind? IndiGo has managed to get more and more Indians to fly on its network by continuously introducing new flights, opening new stations and keeping to its promise of consistent low fares. SpiceJet, on the other hand, has shown a remarkable turnaround by getting back to basics, expanding capacities and shutting down non-viable stations while increasing frequencies to existing stations. As for GoAir, the airline is probably waiting for new aircraft to arrive - it is expected to take deliveries of up to 15 aircraft each year beginning 2016 (till 2020). With such a rapid increase in capacity, the airline may give tough competition to LCC warriors IndiGo and SpiceJet from next calendar. According to a recent report by global aviation consultancy CAPA, IndiGo could grab up to 50 percent share in just two more years and 40 percent this fiscal itself. As India’s domestic aviation grows on the back of low fuel prices and increasing demand, IndiGo seems poised to reap maximum benefits among all Indian airlines. And the airline has been preparing for market dominance for a long time. It started operations in 2005-06 with an order for 100 Airbus 320 aircraft and all deliveries have been completed from this order. IndiGo placed a second order with Airbus for 180 A320neos in 2011 and now, it has placed yet another order for 250 more of these aircraft. It is clear that not just CAPA, IndiGo itself sees a huge potential in the Indian aviation market and is trying to out-manoeuvre competitors by aggressive capacity expansion. As of now, the airline has a fleet of 96 operational aircraft and offers over 600 daily flights connecting 38 destinations. It is widely expected to go for a public offer soon and could raise up to $400 million by offloading up to 25 percent equity. Whats the secret of SpiceJet’s rapid turnaround? SpiceJet was in such doldrums last December that it had to shut down operations briefly because it had no cash to buy fuel. But in the last five months, the airline has seen capacity addition under the new management, focus on costs and myriad fare schemes attracting flyers. Between January and May this year, domestic air traffic jumped by over 20 per to 3.22 crore (2.67 crore) as per DGCA data.