Low Cost Indian Carriers Among the Fastest Growing Airlines

Tuesday, 5th February 2013 at 02:44am

In the latest global ranking in the world aviation industry, India's own IndiGo and SpiceJet were among the most aggressive when it comes to expanding operations.

In 2012, budget carriers IndiGo and SpiceJet expanded their capacity by 34.6% and 16% respectively. In contrast, full-service airlines, Air India and Jet Airways, contracted.

The country's largest budget carrier, IndiGo, improved its 14th place in 2011 to 11th largest in 2012 in terms of passenger volume among low-cost carriers, according to the latest publication by Centre for Aviation. Its closest rival, SpiceJet, managed to climb one place to 19th from its 20th position in 2011. The figure shows that IndiGo's capacity expanded to 489 million available seat kilometers (ASK) in a weekly basis for 2012, up from 363 million in 2011.

In the full-service airlines category, both Air India and Jet Airways slid down from their 2011 position. Air India showed a minimal decline in its capacity in 2012 at 3.1%, to land at 35th position from 34th in 2011. Jet Airways, on the other hand, plunged seven places from its 2011 position or a decline by 11% in 2012.

Air India is the oldest airline in India, having established in 1932. Its market share began to shrink during the advent of the competitors particularly at the start of 2000s. Today, its domestic market share is estimated at 20.7%, a far cry from the low-cost carrier IndiGo's 27.3%. The quality of service, likewise, seems to go along with the volume figures as well. IndiGo boasts of the lowest cancellation rate among Indian airlines while Air India is in the opposite extreme.

According to an aviation analyst, Sharan Lillaney, expounds that the changes in capacity mirror the waiting time between the growth in volume and being profitable. This explains why the two full-service airlines won't see growth until they become profitable after their past fleet expansions.

He said further that any airline can acquire a new aircraft, albeit on lease, adding to overall capacity bu it doesn't mean that profit is on hand. Jet is holding back its expansion plans for a few quarters until they see profits. Air India, meanwhile, was told by the government to do the same until profits come in.

IndiGo is, by far, the only Indian airline that has been profitable for the past four years. All other airline posted losses during the same period. SpiceJet, for example, posted a gross loss amounting to Rs1.6 billion ($29.4m) in fiscal year ending 2012 after it made profits of Rs3.7 billion in the previous period. Jet Airways, meanwhile, posted a loss of Rs12.4 billion during the fiscal year 2011-2012 after it posted a minimal Rs96.9 million profit during the 2010-2011 period.

Ghosh identified three major stumbling blocks most Indian airlines face in their quest for profitability: staggeringly high airport fees, high fuel costs, and airport management inefficiency. Nonetheless, Sharan predicts that Indian carriers will start to see profits during the first quarter of this year.

By: .

Cheap Flight Search

Depart From:
Arrive At:
Departure Date:
Return Date:
Currency:
Passengers:

Sign up for the India Flights updates!

For all the latest news on India flights 'like' us now:

Skypicker banner