Logistics

Air India, Jet Airways see dip in domestic market share

Forum Gandhi Mumbai | Updated on December 30, 2018 Published on December 30, 2018

Air India’s market share declined to 12.7 per cent

 

Air India, Jet Airways and SpiceJet lost market share, even as the industry witnessed an overall number of passengers increased 19.2 per cent, between January and November.

According to CRISIL, which analysed data released by DGCA, domestic capacity in terms of Available seat kilometre, (ASKM) of airlines in November increased by 20 per cent, year-on-year, driven by capacity addition by low cost carriers (LCC) which accounted for 90 per cent of the capacity addition.

On the other hand, capacity additions by full service carriers (FSC) have relatively been muted due to the financial constraints of the players.

Air India has been facing headwinds for the past few quarters, yet, the airline carried 160.44 lakh passengers between January and November 2018 in comparison to 141.09 lakh during the same period last year. However, the airline saw its market share decline to 12.7 per cent at the end of November, as compared to 13.3 per cent in 2017.

An Air India official said, “Air India has not expanded its domestic operation in last few months vis-a-vis the other operators, the Market Share of Air India remained constant.” Full service carrier, Jet Airways carried 175.93 lakh passengers as on November 2018, as compared to 163.61 lakh carried same period last year.

The market share, however, declined from 15.4 per cent last year to 13.9 per cent in November.

When contacted a Jet Airways spokesperson said: “Jet Airways believes in responsible addition of capacity and its optimal deployment to increase efficiency, efficacy and Return on Investment. As stated earlier, the airline is not chasing market share at the cost of profitability.”

Improvement in yields

Vice-President ICRA Limited, Kinjal Shah said, “Profitability is not dependent on market share; it’s dependent on passenger growth, passenger load factor and yields. Unless these airlines see an improvement in yields, even an increase in market share or passenger growth will not be beneficial to the industry.”

Hetal Gandhi, Director, CRISIL Research, said: “Over the past few years, LCCs have been continuously gaining share . This is mainly due to their better financial strength in terms of leverage and operating costs. Over the next five years, CRISIL expects the share of LCCs will rise on account of a faster induction of capacity compared to FSCs”

Published on December 30, 2018
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