‘Dubai air­port serves as my travel gate­way’

The Hindu Business Line - - FLIGHTPLAN - ANAND KALYANARAM­AN/ASHWINI PHADNIS

The March 2019 quar­ter will likely fig­ure among the most mo­men­tous ones in In­dian avi­a­tion. It saw the un­rav­el­ling of In­dia’s first pri­vate air­line Jet Air­ways’ for­tunes and the even­tual sus­pen­sion of the air­line’s op­er­a­tions in April due to a fund­ing squeeze.

This had, and con­tin­ues to have, pro­found im­pli­ca­tions for the In­dian avi­a­tion sec­tor.

In the near term, Jet’s loss has been a gain for other air­lines — es­pe­cially the two listed play­ers, IndiGo and Spice­Jet. The Cen­tre for Asia Pa­cific Avi­a­tion (CAPA) feels Vis­tara may be the great­est ben­e­fi­ciary of Jet’s exit and says that if Vis­tara can man­age the costs and com­plex­i­ties of ev­ery­thing that it has on its plate, “this is a unique op­por­tu­nity” for it to emerge as a lead­ing full-ser­vice air­line.

From prized air­port slots to trained em­ploy­ees, Jet’s valu­able as­sets have been up for grabs and the com­pe­ti­tion has not missed an op­por­tu­nity to cap­i­talise on

this. The re­moval of ma­jor ca­pac­ity — Jet was the sec­ond largest air­line by mar­ket share in the do­mes­tic skies — also gave ri­val air­lines much-needed pric­ing power, a rare com­mod­ity in the bru­tally com­pet­i­tive In­dian avi­a­tion mar­ket.

In more good news for IndiGo and Spice­Jet, there was a shift in pas­sen­ger traf­fic from Jet, help­ing both the air­lines to make a strong come­back in the March 2019 quar­ter, after a dis­mal show in the prior three quar­ters.

The March quar­ter is gen­er­ally a sea­son­ally weak one for air­lines in In­dia but

IndiGo’s prof­its jumped five­fold year-on-year (y-o-y) in the quar­ter, to ₹590 crore, while Spice­Jet saw its profit in­crease 22 per cent to

₹56 crore.

In con­trast, the two air­lines had posted losses or seen a sharp de­cline in prof­its in the June,

Septem­ber and De­cem­ber

2018 quar­ters. again the way they had in the first half of FY2019. “This is a cycli­cal phe­nom­e­non and in my close to two decades in the in­dus­try, I have not seen such a high price cy­cle for crude last for more than 4 to 5 months and this oc­curs once in 3-4 years,” he says.

Both IndiGo and Spice­Jet cap­tured more sky in the March quar­ter. As of March 2019, IndiGo’s do­mes­tic mar­ket share was close to 47 per cent while that of Spice­Jet was nearly 14 per cent. This seems set to in­crease with both air­lines mov­ing in to fill the vac­uum cre­ated by Jet’s exit and con­tin­u­ing on their ag­gres­sive fleet ex­pan­sion plans.

IndiGo plans to in­crease its ca­pac­ity by 30 per cent and Spice­Jet by 80 per cent in FY 2020.

The two air­lines are also press­ing the throt­tle on in­ter­na­tional routes, mov­ing in to oc­cupy the space va­cated by Jet which was among the largest car­ri­ers of traf­fic to and from In­dia.

A study by CAPA says that in the long term, Jet’s clo­sure will positively trans­form the mar­ket dy­nam­ics for In­dian car­ri­ers and fis­cal 2020 could mark a good turn­ing point for the sec­tor. It fur­ther states that in fis­cal 2020, In­dian air­lines are likely to re­port a com­bined net profit at the in­dus­try level.

Pric­ing dis­ci­pline

“In an op­ti­mistic sce­nario the in­dus­try could post a profit of $500-700 mil­lion. Even in a pes­simistic sce­nario, air­lines are likely to re­main in pos­i­tive ter­ri­tory to the tune of $250-400 mil­lion”, CAPA pre­dicts. But it cau­tions that some amount of pric­ing dis­ci­pline is re­quired and the ru­pee re­main­ing sta­ble at about ₹70 and oil prices re­main­ing sta­ble are cru­cial for higher prof­its in 2020.

Kin­jal Shah, Vice-Pres­i­dent and CoHead, Cor­po­rate Sec­tor Rat­ings, ICRA, adds another word of cau­tion when she says that while the in­creased air fares have sup­ported the prof­itabil­ity of the air­lines dur­ing Q4 FY2019 and Q1 FY2020, the im­pact on pas­sen­ger growth does not bode well for the in­dus­try. My favourite air­port: It’s hard to choose one favourite air­port but if I had to, I would pick DXB

(Dubai).

What I like about it: To me, DXB serves as the gate­way for where I need to and want to go in the world. The prac­ti­cal and the pos­si­ble. I have the fond­est mem­o­ries of trav­el­ling with my wife and later as a fam­ily on hol­i­days to Paris, the

US, Oman — some des­ti­na­tions I never dreamt I would ever visit. All these mem­o­ries route through DXB and I make it a point to truly dis­con­nect, be present and en­joy my hol­i­day, so lots of happy mem­o­ries there.

Just last week, I was look­ing at the de­par­ture mon­i­tor and the dozens of des­ti­na­tions around the world while think­ing about my own ‘bucket list’ of places I wish to travel to. Will I ever visit Baku or Ge­or­gia or Bos­nia and what will those experience­s be like? What could be im­proved: I don’t have much to add since DXB is al­ready known to be in­no­va­tive and proac­tive. Given the range and scale of vis­i­tors, per­haps a greater fo­cus on tech­nol­ogy to per­son­alise the in-air­port ex­pe­ri­ence for vis­i­tors not cov­ered by the lan­guages al­ready dis­played within the ter­mi­nal — where to go, what ser­vices are avail­able, how to con­nect and other ar­eas unique to that pas­sen­ger.

Other air­ports I like: I love the world-class air­ports we have in In­dia. One mar­vels at the ar­chi­tec­ture of Mum­bai In­ter­na­tional Air­port with its mod­ern de­sign and the ex­panse of Delhi Air­port. I won­der at how much In­dia, and specif­i­cally In­dian air­ports, have changed from my vis­its as a child.

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