Leading the pack yet again - IndiGo now corners 36.4% market share

Summarizing 2014

2014 was a year of mixed emotions for Indian Aviation. The industry returned to growth after a brief hiatus post the fall of Kingfisher Airlines and in the latter half of the year saw reduction in prices of Aviation Turbine Fuel (ATF) on global cues.

With this came the unprecedented but widely forecasted crisis at Spicejet, after few steady months. The year which started on a good note for Spicejet, having performed better than IndiGo in its much touted On Time Performance (OTP) ended with one of the worst performances on the same parameter for the airline, recording a low of 47% on time departures at Delhi in December’14.

Go Air, launched a new station – Bhubaneshwar and deferred delivery of its 20^th aircraft, Air Asia had muted performance with expansion nowhere close to what was being discussed and published.

Jet Airways was resurgent with funding from Abu Dhabi’s Etihad and subsequent changes, while only other Full Service carrier Air India had its own share of problems with the technical glitches on the Dreamliner’s and engineering issues on the Narrow bodies yet made it to Star Alliance.

Well, that leaves us with IndiGo – which continued to expand with more flights between metros and launching flights to few more domestic and international destinations. The airline also, for the first time decided to induct aircraft available in open market as a stop gap arrangement till the A320 NEO are inducted.

IndiGo continued to be a market leader, closing the year with a market share of 31.8% followed by Jet Airways and its subsidiary Jetlite at 21.7%. National carrier Air India garnered 18.4% while Spicejet cornered 17.4%. Go Air failed to breach the double digit mark and ended the year at 9.2% with Air Costa and Air Asia closing at insignificant 0.9% and 0.5% respectively.

2015 begins

Passengers grew 21.33% MoM in January 2015, an indication of return of good times and assertion that growth in capacity is followed by growth in passenger numbers.

The year started with news of change in ownership at Spicejet and launch of Vistara. Both will have an impact on the market in these 12 months of 2015. However, at the end of January, Spicejet was still struggling to get its act in order with an On Time Performance (OTP) of just 34% at Delhi in January. Indeed most of it was affected by fog, but it wasn’t fog alone which led to this performance.

The OTP remained an issue for all airports across the country due to the fog in North & East India which was around for a prolonged period than yesteryears. Normally unaffected stations also saw fog this year which compounded the problem.

January 2015 saw a total of 62.45 lakh passengers taking to the skies, with the month clocking marginally lower Load Factors than December 2014.

Jet Airways clocked the maximum load factors of 87.4 percent for flights operated under Jetlite code (S2) and 87 percent for those operated under Jet Airways (9W), while the lowest load factors were clocked by new comer Vistara which recorded 45.4 percent. Vistara did not have complete month of operations and this was its first month, thus this is too early to judge the performance.

Spicejet saw maximum cancellations and also maximum complaints – a trend that should reverse very soon as funding is tied up and operations are back to normal.

IndiGo continued to outperform competition in market share as well as On Time Performance with overall On Time Performance of 73.3% and a market share of 36.4%. Spicejet had the worst On Time Performance with less than 50% of its flights being on time. This is largely due to its performance at Delhi being hit to a low of 34%.

Go Air has seen its market share slip from over 10% which it achieved twice last year to less than 9% now. With no addition to capacity, the airline will find it tough to hold on to the market share. However, the airline continues to have some monopoly or duopoly routes which the competition is not after. This is either due to slot constraints at Mumbai or the leaders fighting it out with the newbies in the market.

Challenges Ahead

2015 will be a challenging year, Vistara would be flush with funds to expand and Air Asia would be hoping to get back on track with newer routes, planes and a massive expansion if they have to sustain. So far it looks like IndiGo has been able to contain them and made them re-think on the plans they had. Jet Airways will continue its expansion to its middle eastern hub of Abu Dhabi with flights from Ahmedabad and Pune on agenda effective March. This year will also give us an answer on the European hub strategy of Jet Airways.  Spicejet will get its strategy in place with respect to Q400 and B737 and will have another “NEW” network this year.

If all goes well, by year end IndiGo may receive the all new A320 NEO. Spicejet would hope to stabilize the network and operations in first half of the year and take a decision on the Q400s by mid-year. Go Air could well be the next airline to start international operations, most likely a short hop from Mumbai or Delhi.

Lastly, the government will have to get its house in order and iron out differences on the revised Route Dispersal Guidelines and revise the 5/20 rule at the earliest. The battle for Noida airport will increase from here on and so would this be a critical year for Navi Mumbai. Any delay now, will mean the airport opening certainly gets pushed post next general elections

I can only hope for a great 2015 for Indian Aviation !

The story of highest load factor in September

As reports started trickling in that the Indian market has grown 27.8% MoM, people were astonished to know that data is for September, traditionally a lean month for travel in India. The entire industry, tends to work on two good quarters – Q1, covering the school holidays and Q3, covering the Diwali & X’mas holidays, while the other two Q2 & Q4 are traditionally bad because only business travelers fly and less people tend to fly for leisure.

Overall, all airlines in India have improved on OTP, with the lowest being 75%+ but IndiGo continues to outperform at 90%. Spicejet has not been able to keep up the momentum of Dec – Feb period and that is more to do with the fact that IndiGo was heavily impacted by the winter / fog, where as Spicejet has much lesser operations at such stations. Once the weather turned good, it was difficult for all airlines to catch up with IndiGo. However, the point of discussion has now shifted from OTP to Load Factor.

This growth is an indication of how the Indian market reacts, and a vindication that people fly more only when fares are cheap. At these fares, seats are filled up but airlines struggle to make money, but at higher fares, seats are empty, yet the revenue may be better. I am no expert in Revenue Management and only results of airlines for this quarter will let us know the financial position of two listed airlines – Spicejet & Jetairways, who had some difficult questions to answer when numbers were reported for last year.

Spicejet topped the load factor chart with 85.9%, which was followed by Jetlite at 82.7 and Go Air at 82.3.  Jetlite which primarily operates on monopoly routes or duopoly ones seems to be doing bad on few of its flights on the metro segments. Market leader IndiGo was at modest 77.9 percent.

The Load Factor of Air Asia India, was a far cry from the tall claims by the airline of being full for the first few months of operations. With claims of profitability, sold out flights and much more, Air Asia clocked the lowest Load Factor of 68.7%. Air Costa on the other hand, has been able to consolidate and increase Load Factors, more because only two aircraft were in operation for majority of the period.

With a lot of discussion, justification, counter points coming up about the market simulation by Spicejet, let me throw some light on the sale / offers which were launched by this airline. There were no less than 5 times that a sale was announced for tickets in September and all of them had competitive cut throat pricing.

		Period for which ticket is sold
Sale Start Date	Sale End Date	01-Sep	05-Sep	10-Sep	15-Sep	20-Sep	25-Sep	30-Sep	Tickets @
01-Aug	03-Aug								2099
05-Aug	10-Aug								2199
12-Aug	14-Aug								1947
20-Aug	22-Aug								2269
25-Aug	27-Aug								1888

This has certainly helped in shoring up loads but has it helped in making money? We would know this only when Spicejet announced the results of Q2. 

The month to look out for would be December, where IndiGo has in the past had load factor of 90%+ and all others have found it difficult to match that. However, with numerous sales by Spicejet in the past selling tickets for December, this year could be different. 

Aviation Weekly

The WS14 schedule comes in effect from 26^th October’14, airlines in India and world over are busy making schedule changes. Across the world, leading airlines make changes in the schedule well in advance to ensure that bookings are open for right flights.

However, the story changes completely in India. An airline like Jet Airways which has a large & extensive network, simply replicates the schedule of last winter to this winter and same for summer. People tend to see a lot of flights, which the airline has not flown and will not fly, open in the reservation system. The same would get cancelled few weeks before the start of schedule and inconvenience the passengers.

This also has financial impact, since every GDS change is charged to the airline, and hence large number of transactions has a drag on the company finances.

This winter schedule will see Jet Airways shifting focus to Abu Dhabi, launching flights from more cities in India to Abu Dhabi along with further changes on the domestic network, IndiGo trying to expand and prevent Air Asia from expanding, Spicejet trying to consolidate and stabilize with reduction in capacity and Go Air launching a new station with the existing fleet.

GoAir launches Bhubaneshwar

Go Air is launching flights to Bhubaneshwar, effective winter schedule. The flights would connect Bhubaneshwar to Kolkata, Mumbai & Delhi. The flights would operate as below.

G8161 DEL0610 – 0815BBI D

G8162 BBI0845 – 1110DEL D

G8163 DEL1645 – 1855BBI D

G8164 BBI1925 – 2130DEL D

G8243 CCU0920 – 1030BBI D

G8244 BBI1830 – 1940CCU D

G8243 BBI1100 – 1335BOM D

G8244 BOM1540 – 1755BBI D

This will be 22^nd station for Go Air and a new station after 2012, when Chennai & Port Blair were launched. Go Air has launched this without any addition to its fleet and operates 19 aircraft across its network.

IndiGo is the dominant player at Bhubaneshwar with flights to Delhi, Kolkata, Bengaluru, Vizag, Mumbai, Chennai & Hyderabad. Go Air is attempting to fill in the void created by Jet Airways when it pulled out of Bhubaneshwar as part of network restructuring. Jet Airways was a dominant carrier once upon a time with double daily flights to Kolkata and direct flights to Bengaluru, Mumbai, Delhi, Raipur and Chennai.

IndiGo expands, again!

IndiGo, recently in news for placing a 250 aircraft A320 NEO order, and a deal with Tiger airways is adding capacity on domestic sector.

Effective winter schedule, it is adding flights on Bengaluru – Delhi and Delhi – Goa sector. This will be 9^th Daily flight on Bengaluru – Delhi and 4^th Daily on Delhi – Goa.

6E399 DEL1150 – 1450GOI D

6E398 GOI1445 – 1720DEL D

6E507 DEL1840 – 2050BLR D

6E508 BLR0820 – 1050DEL D

Considering the long gap at Bengaluru, from 2050 till 0820, an international leg in future may not be ruled out. The international leg could be to one of its existing stations, with Dubai being the most likely and the alternative being Singapore.

IndiGo adding second daily to Coimbatore

IndiGo will add one rotation from 17^th November from Delhi, which will operate Delhi – Coimbatore – Chennai – Kolkata and vice versa. This will be 2^nd Daily non-stop service on the Delhi – Coimbatore sector, 3^rd Daily on Chennai – Coimbatore and 5^th Daily on Chennai – Kolkata sector.

IndiGo has monopoly on the non-stop Delhi – Coimbatore sector, whereas it would have maximum seats & frequency on Kolkata – Chennai sector, where Air India and Spicejet operate one and three daily flights respectively

The new flights would operate as below.

6E397 DEL0640 – 0925CJB D

6E272 CJB1000 – 1055MAA D

6E272 MAA1140 – 1345CCU D

6E275 CCU1415 – 1645MAA D

6E275 MAA1715 – 1820CJB D

6E396 CJB1850 – 2200DEL D

This rotation will start after delivery of its 100^th aircraft on order and last of the initial order placed in 2005. The aircraft is likely to be registered as VT-IAY.

Jet Airways, operated the Coimbatore – Chennai – Kolkata leg as part of its Ahmedabad – Bengaluru – Coimbatore – Chennai – Kolkata rotation but pulled out after operating for two seasons.

This is a classic case of how a lean airline with low cost base can sustain, survive and grow as compared to one with financial liability. Only IndiGo has survived on the Ahmedabad – Bengaluru sector, which has been tried and shut by other airlines like Jet Airways, Go Air and Spicejet.

Air India takes delivery of another Dreamliner, upgrades flights to Bangkok

Air India recently took delivery of its 17^th B787 Dreamliner aircraft, registered VT-ANR.

Air India which operated Mumbai – Bangkok – Mumbai and Delhi – Bangkok – Delhi flights on A321, is upgraded these sectors to B787 Dreamliner, effective 14^th October.

The timings are as below

AI330 BOM0200 – 0745BKK D

AI333 BKK0855 – 1200DEL D

AI332 DEL1340 – 1935BKK D

AI331 BKK2050 – 2340BOM D

These new flights give another swapping opportunity and better rotate the B787 in Air India’s fleet.

The domestic segment of this flight, AI330 Goa – Mumbai, continues to be operated at existing timings with A321.

This comes after Air India started flying direct on the Mumbai – Singapore sector, changing its earlier rotation of Mumbai – Chennai – Singapore – Chennai – Mumbai. The new rotation, Mumbai – Singapore – Chennai – Singapore – Mumbai, gives it an edge over relatively lucrative Mumbai – Singapore sector but has to compete with Singapore Airlines A380 flights at similar timings along with Jet Airways which operates double daily flights onboard the B737.

Chennai – Singapore sector is considered one of the lowest in terms of RASK and thus timings may not make a big impact either ways

Air India re-introduces flights to Vadodara

With the Minister of Finance of Gujarat Government going public and requesting Air India to re-start flights to Vadodara, Air India seems to have taken note and restarted flights. Earlier the flight was operated by CRJ-700 and now this would be operated by A320

The flight would operate as below,

AI819 DEL0625 – 0800BDQ D A320

AI820 BDQ0835 – 1015DEL D A320

The flights will be operated by all economy A320

Spicejet cancels select flights

SpiceJet, the only operator on Mumbai – Surat sector has withdrawn flights till further notice. The announcement was done on Twitter. The airline started Surat with operations from Delhi and Mumbai and last season changed to have separate flights to operate Kolkata – Bengaluru – Mumbai – Surat and vice versa, and Delhi – Surat – Delhi with one way connection to Kolkata.

The Bengaluru – Mumbai – Bengaluru leg of the flight is not available for booking till the beginning of Winter Schedule.

Spicejet re-delivers another aircraft

Spicejet has re-delivered another aircraft, VT-SPT, which was named Clove. The aircraft was ferried to Dublin, Ireland via Ankara, Turkey. VT-SPT was B737-900ER and with Spicejet for close to 7 years. The number of B737-900 in fleet is down to 5.