Frequent fare discounts work their charm, SpiceJet becomes 2nd largest airline in India. Frequent fare discounts and marketing initiatives seem to be working for SpiceJet, which became the second largest domestic airline by passengers in June. It now holds sway over a fifth of the domestic market with over 19% share. SpiceJet has been leading fare sales from the front, forcing rivals to follow suit as it battles an increasingly competitive market and arrival of new players like AirAsia. Whether this frequent discounting on advance purchase fares help the airline emerge from losses remains to be seen but this practice has certainly got more people flying SpiceJet than in recent months. IndiGo remained a comfortable leader since it held almost a third of the market but Jet Airways shrunk to its lowest share yet at just over 15% in June IndiGo is reportedly in expansion mode as it considers various options to raise funds and is also considering a large fleet order. One in three domestic passengers fly IndiGo and IndiGos hold over the market may tighten as it gets more investors, expands fleet and perhaps its network in the coming months. Jet Airways though, has seen its fortunes and market share dip despite getting a lifeline from equity investor Etihad Airways last year. Last week, it launched an unprecedented 20-50% flat sale on domestic and international routes in what is seen as an attempt to generate quick working capital. Analysts have already said both Jet and SpiceJet could declare losses for the June quarter; these airlines saw record losses in FY14. But GoAir is a success story. The airline has crossed 10% share of the market for the first time by remaining focused on routes and shunning mindless expansion. It now plans to take delivery of its 20th aircraft this October, thus becoming eligible to fly abroad. GoAir is the only profitable Indian airline apart from IndiGo. That leaves Air India, the state run airline, which notched up market share of close to 18% in June. Airline officials claimed economy class loads were over 80% which means 8 in 10 economy seats were occupied last month. But overall domestic traffic dropped by about 6% in June over the previous month, despite June being one of the busiest air travel months of the year due to school holidays. There was shortfall of more than 3.3 lakh air travellers in June over May as only 55.22 lakh people chose to fly versus 58.54 lakh in the previous month, as per DGCA data. That airlines struggled to fill seats in one of busiest months of the year was evident by the fact that despite their cutting back on capacity (number of seats on offer) by over 3%, only two airlines managed to fill eight in 10 seats on their aircraft. SpiceJet and GoAir were neck and neck with load factors of 81.4% and 81.5%, respectively. Even these airlines were therefore forced to fly with two empty seats for every 10. Market leader IndiGo was close behind as it managed to fill close to 8 in 10 seats at 79.1% load factor but Jet Airways was at the bottom of the ladder since it could not even fill 7 in 10 seats and load factor settled at just 69.4% during the month. Air India managed to fill three in four seats with 75.4% load factor and JetLite also had similar aircraft occupancy at 75.9%, as per DGCA.
Posted on: Mon, 28 Jul 2014 09:00:50 +0000