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IndiGo corners 32% of domestic market, widens lead over Jet Airways

LiveMint logoLiveMint 20-05-2014 Tarun Shukla

New Delhi: InterGlobe Aviation Pvt. Ltd-run IndiGo has widened its lead over its nearest rival by almost 10 percentage points, cementing its position as India’s largest airline by passengers flown, according to data released on Tuesday by the aviation regulator.

The Gurgaon-based budget airline, controlled by entrepreneurs Rahul Bhatia and Rakesh Gangwal, has a 31.6% share of the domestic air travel market, leaving Jet Airways (India) Ltd group at a distant second with a 21.8% share, April data from the Directorate General of Civil Aviation (DGCA) show.

Launched in 2006, IndiGo had garnered a 29.8% market share by April 2013, followed by Jet and its affiliates with 22.6%, SpiceJet’s 19.6%, Air India’s 19.2% and GoAir’s 8.9%.

National airline Air India’s share has declined to 18.3%, SpiceJet’s to 17.9% and GoAir’s to 9.5%. AirCosta, a regional airline based in Vijayawada, Andhra Pradesh, has cornered a 0.8% share.

In April, a peak month for travel, AirCosta had the highest seat occupancy of 77.8%, with IndiGo following at 76.9%, GoAir’s 76.1%, Jet Airways affiliate JetLite with 76%, Air India and SpiceJet with 73.3% each and Jet Airways at 70.9%.

India’s air travel market grew by 4.75% in April to 5.31 million passengers compared with 5.07 million in the same month a year ago.

IndiGo has 78 aircraft and operates 496 flights daily with most of its operations focused on the Indian market, unlike Air India and Jet, which have sizeable international operations that make up more than 50% of their total revenue. IndiGo’s international revenue accounts for nearly 15% of total revenue.

“IndiGo is leading on all key benchmarks,” said Kapil Kaul, South Asia chief executive officer (CEO) of consulting firm Centre for Asia-Pacific Aviation, adding that the large lead it had taken in domestic operation wasn’t surprising.

“Jet and others are not expanding domestic operations. Except IndiGo, other domestic carriers are likely to freeze expansion or downsize,” Kaul said. “I don’t see Jet Airways, Air India expanding and SpiceJet is likely to downsize by 5-7 aircraft in 2014-15.”

Most of India’s airlines, hit by a surge in costs, a weak rupee that makes imports more expensive and an economic downturn that has restricted growth in passenger traffic, are struggling for recovery. Last week, SpiceJet, India’s second largest budget airline, posted a record net loss of `1,003 crore in fiscal year 2014.

“Financial challenges will become more serious with the new players entering the market,” Kaul said. “Except IndiGo and to some extent GoAir, all others need serious restructuring of their domestic operations, which may see further downsizing.”

The Tata Group is set to launch a budget carrier in partnership with AirAsia Bhd and a premium airline with Singapore Airlines Ltd this year. They have the advantage of starting with a clean slate, unburdened by legacy costs, unlike existing airlines.

New rivals have already made their ambitions clear.

“(We have) exciting plans for AirAsia India,” AirAsia group CEO and founder Tony Fernandes said on micro-blogging site Twitter on Tuesday, addressing AirAsia India CEO Mittu Chandilya. “Whatever IndiGo tries to do to stop us, it just makes us stronger and smarter.”

IndiGo declined to comment on the matter. IndiGo is one of the airlines that has opposed AirAsia’s entry into India and filed a lawsuit together with some other carriers grouped under the lobby Federation of Indian Airlines.

“It clearly shows that airlines like IndiGo...are not willing to face real competition,” said Sudhakara Reddy, national president of Chennai-based Air Passengers Association of India. “It is sad that all other airlines are losing their market share merely due to their poor service and lack of on-time performance etc. We want healthy competition and we welcome new airlines like AirAsia, Tata-Singapore to come into the market.”

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