New airlines more than double their market share
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Airlines that started operating in the last three years have started chipping away at the market share of established carriers, data showed.
Operating modest fleets, the new airlines—mainly AirAsia, Vistara and Air Costa—captured 5.8% of the market share in January this year, up from just 2.5% a year ago, according to data from the Directorate General of Civil Aviation (DGCA). The 5.8% figure also includes Air Pegasus and TruJet, which started services late last year and got 0.3% and 0.4%, respectively.
India’s domestic airline market is dominated by IndiGo (InterGlobe Aviation Ltd), Jet Airways (India) Ltd, Air India Ltd, SpiceJet Ltd and GoAir.
Market leader IndiGo’s share fell from 36.4% to 35.6%, Air India’s from 18.7% to 16%, Jet Airways’ from 23.2% to 21.4% and GoAir’s from 8.9% to 8.1%.
SpiceJet was the only established airline to increase its market share, from 9.4% to 13.2%. The airline, which landed in a crisis in December 2014 owing to a cash crunch and grounding of its planes, began to recover only after a new promoter took over early in 2015.
Former Jet Airways chief executive Steve Forte said new airlines have been able to corner quick market share as a result of better market conditions.
“This is the normal effect of increased competition and, due to a dramatic drop in fuel costs, more flexibility in the pricing strategies. What the established carriers have as an advantage is the international networks and prime airport slots. Eventually, if the new comers go international, it may turn out to be substantial problems for the higher-cost carriers as they might not be able to match the competition,” he said.
Passenger traffic grew about 23% this January, compared with about 21% a year ago, on the back of cheaper fares led by low oil prices. Poor customer service, baggage and flight problems formed the biggest chunk of complaints DGCA received from customers, the data showed.
Flights were almost full for SpiceJet at 92.1%, followed by GoAir (84.9%), IndiGo (84.7%), Air Costa (84%), Jet Airways (82.5%), TruJet (83.4%) and AirAsia (81.9%). Vistara had the lowest occupancy at 74.8%.
Aviation consultancy firm Capa expects domestic passenger traffic to touch 100 million passengers by 2016-17. Airlines carried 81 million in 2015, up from 15.7 million in 2003-04 when India’s first low-cost airline, Air Deccan, was launched.