Chart Beat: Why IndiGo’s market share slipped in January

Indigo's market share slipped month-on-month to 60.2%. (Bloomberg)
Indigo's market share slipped month-on-month to 60.2%. (Bloomberg)

Summary

  • Drop in share of IndiGo likely reflects impact of its aircraft grounding in Q4, even as peer Air India continues to build fleet, analysts said

IndiGo’s domestic passenger traffic grew 16% year-on-year in January, but market share slipped sequentially to 60.2%. The InterGlobe run airline's market share is the lowest since the shutdown of Go First’s operations in May. “Drop in share of IndiGo likely reflects impact of its aircraft grounding in Q4, even as peer (Air India) continues to build fleet," said Jefferies India. The market share of the Air India group touched a recent high of 28.3% last month versus 27% in December.

Hereon, investors will keep a close eye on how fuel prices shape up in the coming days, as that will be crucial from a profitability perspective. Aviation turbine fuel (ATF) prices account for a big chunk of operating costs of airlines, and thus, higher fuel prices hurt profits. ATF prices fell a bit month-on-month in February. “Spot jet fuel suggests ATF may remain stable month-on-month next month," according to Jefferies.

 

 

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