India's aviation growth piloted by IndiGo

Domestic air passenger traffic growth over the past few years, which has invariably crossed 20%, has to a large extent been driven by India's market leader IndiGo.

This is what can be inferred from Directorate General of Civil Aviation (DGCA) data on market share numbers, which shows that it is the only domestic carrier, barring new entrants Tata group-owned AirAsia and Vistara, that has expanded its pie in the aviation market since 2014.

Over the last four years, Rahul Bhatia-owned airline's market share in terms of number of passenger carried has swollen 7.8% to 39.6% in 2017 (average of January-February) from 31.8% in 2014.

Now compare this with full-service carrier Jet Airways, whose share has dipped 1.8% to 15.6% from 17.4%, and state-owned Air India, which saw its pie shrink 4.6% to 13.8% from 18.4% during the same period.

Even Ajay Singh-promoted SpiceJet, which managed to turn around after change in ownership in 2015, has also seen its share in the sky reduce by 4.5% to 12.9% in 2017 compared with 17.4% in 2014. In the same period, GoAir's and JetLite's market chunk also eroded 80 basis points (bps) and 1.8% respectively.

AirAsia and Vistara, which debuted in 2015, have grown consistently with their market share, as per the latest data, at 2.9% and 3.1% respectively.

Kapil Kaul, CEO & director (South Asia) of international airline research and consultancy firm Centre for Asia Pacific Aviation (Capa), told DNA Money that IndiGo had led most of India's traffic and capacity growth.

"India's aviation growth has mostly been propelled by (IndiGo), which has aggressively added capacity, and largely grown the domestic air passenger traffic," he said.

A Capa report – Indian Aviation: A Strategic Review of FY2017 & Outlook for FY2018 – released on February 8 this year, predicts that IndiGo will corner 55%-60% within the next two years.

The airline advisory firm said the New Delhi-based airline will increase its market share by adding two aircraft every month up to March 2018. This, it feels, will further propel domestic air traffic growth.

"(IndiGo's) fleet size to reach 160 by March 2018. Creating strategic compulsion for other Indian carriers to accelerate expansion to remain relevant," the report said.

It said that the current market leader will maintain its lead along with being "profitable"; "(IndiGo) remains profitable and market leader on all counts".

CAPA sees AirAsia and Vistara also staying aggressive in capacity induction with the former's plans to add 10 aircraft in the next 10 months and later considering advancing deliveries of six aircraft in 2018.

Pankaj Pandit, Bengaluru-based aviation expert, said IndiGo was winning over other airlines, not just in terms of market share but also in terms of frequency share – number of departures – and capacity share – available seat kilometres (ASKMs).

Its overall frequency and capacity share was 34.6% and 41.6%, respectively, for 2016 compared with Jet's and Air India's 19.3% and 15.5% and 13.8% and 14.5%, respectively.

"IndiGo has leading market share along with leadership in frequency and capacity share. This means it is putting flights at places and time, where there is demand and at right fare. On the other hand, Jet's market share is lower than frequency share. This means its flights are not resulting in carriage either due to sub-optimal timing or higher pricing," said Pandit.