Vote Share or Market Share, 31% is Top Dog
In April, IndiGo maintained its lead over its rivals with a 31.6% share of the total passengers ferried that month. Jet (Airways plus Lite 21.8%), Air India (18.3%) and SpiceJet (17.9%) followed. IndiGo is the leader in the aviation sector in terms of market share. Funny, though, that nobody notices the flip side — that over two thirds (or 68.4%) of passengers did not opt for IndiGo. Well, nobody cares.
It would be great for its top dog status if more than half of India’s passengers flew IndiGo, but then such virtual monopolies are rare and, in fact, discouraged by industry watchdogs as unhealthy. Let’s take this a bit further — does the fact that 68.4% of passengers didn’t fly IndiGo mean that they don’t think much about the airline; that they distinctly prefer its competitors; and that they will never fly IndiGo ever again in future? Of course not. That the market share data differs every month (Air India’s, for instance, was over 2 percentage points higher in March) indicates that, besides brand recall, brand equity, brand preference, and sheer brand loyalty, passengers are also swayed by the best deals on offer. So, if in May, say, GoAir has more mouthwatering fares to offer than the rest, we could likely see a spike in its market share. And brand loyalty works up to a point — passengers are always free to try rivals’ offerings whenever they feel like (or if IndiGo messes up on some customer satisfaction parameter). The short point: IndiGo’s leadership status indicates that more passengers prefer flying with the airline that any other, but it by no means indicates that passengers have made up their minds that they will not consider any of its rivals. You know where this is leading: if the BJP’s vote share in the general elections stood at 31%, and still allowed it to grab well over half of the 428 seats it contested, does that mean that 69% of the voting population gave the party an outright thumbs down? Not necessarily. Don’t forget that the BJP-led coalition, the NDA, contested every seat but one (542), which explains why the total tally of the alliance stood at 336, with a vote share of 38.5%. So there are voters who didn’t vote for the BJP but for its partners like the Shiv Sena in Maharashtra and the Telugu Desam Party in Seemandhra. Beyond alliance partners, the 61.5% who didn’t vote NDA saw better options, particularly in states like Bengal and Tamil Nadu, where the TMC and AIADMK ruled the roost.
Going back to the BJP and the airline analogy, SpiceJet, which flies almost twice as many southern destinations than IndiGo, would have a healthier market share in that region. This, however, matters little at the national level where IndiGo has a better presence, much like that of the BJP relative to the regional parties.
So, the 69% who didn’t vote for the BJP and the 68.4% of passengers who didn’t fly IndiGo in April shouldn’t take away from the respective leadership status of party and airline.
That said, comparing a political party with an airline has its limitations. An airline, for instance, can’t afford to have the capacity to cater to every single potential passenger — not in a competitive scenario as any diversion of traffic would prove financially disastrous.
Political parties do not have such constraints; so to that extent, theoretically, 100% of those who voted in the constituencies in which the BJP contested could have opted for it.
But there may be another analogy to be drawn from the world of finance. BJP’s 31% share of votes translated into 282 seats. Research analysts on Dalal Street will tell you that market share matters little if it’s coming at the expense of profitability. That profitability is gauged as profits as a percentage of sales, or margins.
IndiGo is easily India’s most profitable airline — it showed profits of just under.`800 crore in 2012-13 on sales of almost .` 9,500 crore — even as most of its rivals reel under losses.
Stretch the IndiGo analogy even further and look at the BJP’s ‘profitability’: 282 out of 428 seats — a margin of just under 66%.
So what if the vote share was on the lower side, the way the Indian electoral system works ensures that it’s profitability that’s king.