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Low-Cost Airlines Flying Faster

The scheduled domestic airlines recorded a 18.7% growth in the number of passengers carried during the calendar year 2010 compared to 2009.

Although the Indian economy recovered swiftly from the slowdown in 2008-09, there has been a remarkable shift in the market share of scheduled domestic airline operators.

The market share of every low-cost airlines — including Indigo, GoAir and SpiceJet — is rising at a rapid pace.

In the calendar year 2010, Kingfisher witnessed a fall in share by over 300 basis points compared to the previous year.

This share was mainly appropriated by Indigo and marginally by Go Air and SpiceJet. The three account for over one-third of the market.

Market Share (%)  
Air India 17.6
Jet Airways 18.6
Jet Lite 7.4
Kingfisher 20.6
Spice Jet 12.9
Go Air 5.9
Indigo 16.3

Going by the current trend, Jet Airways plans to convert a-third of its flights from full-fare to low-cost (Konnect). Given that the peak travel season is coming to an end, the company has taken the decision to improve seat factor. However, it must be noted that profit margins in operating low-cost airlines is far lower than full-fare airlines. Thus, while sales realisation will be lower for Jet Airways, its seat factor (passenger load factor) is likely to improve. Surging expenses, particularly ATF prices, are expected to erode profits.

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Categories: Aviation
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