‘Dubai airport serves as my travel gateway’
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
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.
“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
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.