IndiGo maintains vice-like grip, Aviation industry continues to face turbulence due to Jet fiasco
Indian aviation industry struggled in the month of March on the back of ticket cancellations, led by Jet Airways' financial concerns. This managed to flat passenger growth in the month on a year-on-year basis. Grounding of Jet's flights affected the industry's capacity growth as well, which was down 580 bps on month-on-month (MoM) basis. Industry's revenue passenger kilometre growth was also down 520 bps and the overall load factor was down 260 bps.
Though grounding of Jet's operations has brought in the pricing power in the industry, a significant rise in oil prices (up 33 per cent since Jan 2019) would impact the operating profitability of the companies. Moreover, soaring ticket prices would stunt passenger growth, affecting the top line. Further, the stock prices of IndiGo and SpiceJet have risen significantly on the expectations of gaining Jet’s market share. While we are comfortable with IndiGo and SpiceJet's position, the current prices leave little room for comfort.