Change in ownership, better aircraft utilisation boost November market share
In the beginning of calendar year 2015, low-cost airline SpiceJet was close to closure as debts ballooned and market share plummeted to almost 9% due to curtailing of its fleet. Eleven months later, the carrier has managed to increase its market share to 13.1% in November on the back of a change in ownership and management, renewed focus on operational efficiency, better aircraft utilisation and prudent financial management.
The enhanced market share of SpiceJet is largely due to the large and frequent discount sales it comes up with. Not surprisingly, most of its peers have either lost market share or could not not grow it. According to DGCA data, the market share of Indigo — the largest domestic airline by market share — stayed flat at 36%.
Jet Airways’ market share also remained flat at 19.3% while that of Air India decreased by 250 basis points to 16.2% in the January to November period. The market share of another no frills airline, GoAir, also stood flat at 8.6%.
SpiceJet also recorded highest passenger load factor — above 90% — for the last seven months to November.
“As prices of jet fuel has come down, SpiceJet and other airlines have benefited immensely from this. Due to reduction in expenses and increased efficiency in operations, the new management has managed to bring back the stability in operations,” said an expert from one of the global consultancy firms.
During January to November, passengers carried by SpiceJet increased to 9.77 lakh from 5.87 lakh. In a bid to recover lost ground, SpiceJet has added six new aircraft in the existing fleet, which will help it operate close to 300 daily flights during the winter schedule. “SpiceJet is set to increase its capacity by 50% in the next two years.
Favourable macro-economic conditions and recent restructuring helped the airline to recover the lost ground,” said an aviation analyst.
According to experts, SpiceJet is set to expand its market share in 2016 as result of the expansion in routes. In October, the airline increased its operations to 291 daily flights from 250. In November, the airline also announced operations in 10 new sectors and introduced the Amritsar-Dubai and Kozhikode-Dubai flights.
In order to attract more passengers during the winter season, the airline decided to add 10 new flights to the existing domestic routes including Chennai–Coimbatore and Bengaluru–Vijayawada in January.
In order to consolidate its operations and expand at the same time, the airline is planning to buy 100-150 aircraft, which comprises both big- and narrow-bodied planes, so that it can operate in smaller airports located in Tier 3 and Tier 4 towns.