Business Standard

SpiceJet edges past Jet Airways to be second largest passenger carrier for July

A slew of discount offers allowed SpiceJet a passenger load factor of 67%

BS Reporter  |  Mumbai 

SpiceJet

Fuelled by slew of discount offers and its increasing financial losses notwithstanding, has edged out Jet Airways as the second largest domestic airline in July with a with 20.9% share of the domestic market, ahead of Jet Airways-JetLite which, had a combined share of 19.6%.

That the price war and the frequent discount offers from has impacted other LCCs is reflected in the fact that market leader saw its share go down marginally from 31.6% in June this year to 30.7%. also saw a fall in its market share from 9.8% in June to 9.2% in July.    



also reported highest of 79.4% (67.9% in last July) in the industry, over ten%age points higher than and The market leader however saw its at only 67% (73.1% in July last year).  What is interesting is that  only reported a rise in market share in July and its share of domestic traffic rose from 18.3% in June. and which had reported a steady monthly increase in their market share from January to June, saw a drop for the first time this year in their market share.  Air India market share also fell from 18.5% in June to 18% in July. And Air Asia which has only eight flights in a day opened its account with a market share of 0.5% in July.  
 
The success has been propelled primarily by its frequent discounted offers, analysts aid. They say that by selling fares lower than their cost price they are only increasing their losses. The airline has reported a net loss of Rs 124 crore in Q1 FY 2015 following a Rs 1,000 crore loss last fiscal. The airline's auditors too expressed over its financial health and airline came under scanner for delays in paying statutory dues. Over the last few months has been holding flash sales with a view to encourage forward bookings. While industry saw the repeated sales as an attempt to mop up cash the airline management refused to talk on cash crunch.

Market share comparison for July. Figure in brackets indicates June figure
 
Air India - 18.0 (18.5)
 
Jet Airways - 15.7 (15.3)
 
JetLite - 3.9 (4.3)
 
- 20.9 (19.0)
 
- 9.2 (10.1)
 
- 30.7 (31.6)
 
AirCosta - 1.1 (0.9)
 
AirAsia - 0.5  (0.2)
 
Source - DGCA 
 
All figures in percentages

"Our increase in loads and share is the result of our new network, improved branding and product, and most importantly, our dynamic pricing and revenue management approach where we believe flying empty seats, which is the ultimate perishable commodity, is a waste especially for budget airlines," said chief operating officer in a statement.

“Our increase in loads this year has not been at the expense of yields. We are doing what is best for the airline, and it is a happy win-win-win that it is also best for customers,'' he added.

Last week Kapoor had remarked that the airline was not blindly discounting fares and was simply following global market simulation practice. "World over, all low-cost airlines do it," he said.

However the stock market has not responded to the up beat mood of the company. For instance the shares of fell from Rs 19.20 in July 1st to Rs 13.80 on July 31st, the period in which it has shown an increase in its market share  

"July is a low season for all airlines and it is not surprising to see level dip in that month. Even which shows high levels of has shown a seat factor of 67%. What is it that did to achieve the high seat factor? It defies logic,'' remarked a senior executive of rival airline.

Kapil Kaul of Centre for Asia Pacific Aviation said " Sustained pricing actions have led to higher load factors. The key is to ensure that such pricing initiatives are revenue positive. The first quarter results had closer to 10 percent yield increase which is positive but challenge is to make positive revenue growth in Q2 which is a very weak demand period. Going forward the targeted revenue management will be key. Significant easing of Brent crude oil price is another positive and will help in recovery."

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SpiceJet edges past Jet Airways to be second largest passenger carrier for July

A slew of discount offers allowed SpiceJet a passenger load factor of 67%

A slew of discount offers allowed SpiceJet a passenger load factor of 67% Fuelled by slew of discount offers and its increasing financial losses notwithstanding, has edged out Jet Airways as the second largest domestic airline in July with a with 20.9% share of the domestic market, ahead of Jet Airways-JetLite which, had a combined share of 19.6%.

That the price war and the frequent discount offers from has impacted other LCCs is reflected in the fact that market leader saw its share go down marginally from 31.6% in June this year to 30.7%. also saw a fall in its market share from 9.8% in June to 9.2% in July.    

also reported highest of 79.4% (67.9% in last July) in the industry, over ten%age points higher than and The market leader however saw its at only 67% (73.1% in July last year).  What is interesting is that  only reported a rise in market share in July and its share of domestic traffic rose from 18.3% in June. and which had reported a steady monthly increase in their market share from January to June, saw a drop for the first time this year in their market share.  Air India market share also fell from 18.5% in June to 18% in July. And Air Asia which has only eight flights in a day opened its account with a market share of 0.5% in July.  
 
The success has been propelled primarily by its frequent discounted offers, analysts aid. They say that by selling fares lower than their cost price they are only increasing their losses. The airline has reported a net loss of Rs 124 crore in Q1 FY 2015 following a Rs 1,000 crore loss last fiscal. The airline's auditors too expressed over its financial health and airline came under scanner for delays in paying statutory dues. Over the last few months has been holding flash sales with a view to encourage forward bookings. While industry saw the repeated sales as an attempt to mop up cash the airline management refused to talk on cash crunch.

Market share comparison for July. Figure in brackets indicates June figure
 
Air India - 18.0 (18.5)
 
Jet Airways - 15.7 (15.3)
 
JetLite - 3.9 (4.3)
 
- 20.9 (19.0)
 
- 9.2 (10.1)
 
- 30.7 (31.6)
 
AirCosta - 1.1 (0.9)
 
AirAsia - 0.5  (0.2)
 
Source - DGCA 
 
All figures in percentages

"Our increase in loads and share is the result of our new network, improved branding and product, and most importantly, our dynamic pricing and revenue management approach where we believe flying empty seats, which is the ultimate perishable commodity, is a waste especially for budget airlines," said chief operating officer in a statement.

“Our increase in loads this year has not been at the expense of yields. We are doing what is best for the airline, and it is a happy win-win-win that it is also best for customers,'' he added.

Last week Kapoor had remarked that the airline was not blindly discounting fares and was simply following global market simulation practice. "World over, all low-cost airlines do it," he said.

However the stock market has not responded to the up beat mood of the company. For instance the shares of fell from Rs 19.20 in July 1st to Rs 13.80 on July 31st, the period in which it has shown an increase in its market share  

"July is a low season for all airlines and it is not surprising to see level dip in that month. Even which shows high levels of has shown a seat factor of 67%. What is it that did to achieve the high seat factor? It defies logic,'' remarked a senior executive of rival airline.

Kapil Kaul of Centre for Asia Pacific Aviation said " Sustained pricing actions have led to higher load factors. The key is to ensure that such pricing initiatives are revenue positive. The first quarter results had closer to 10 percent yield increase which is positive but challenge is to make positive revenue growth in Q2 which is a very weak demand period. Going forward the targeted revenue management will be key. Significant easing of Brent crude oil price is another positive and will help in recovery."
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Business Standard
177 22

SpiceJet edges past Jet Airways to be second largest passenger carrier for July

A slew of discount offers allowed SpiceJet a passenger load factor of 67%

Fuelled by slew of discount offers and its increasing financial losses notwithstanding, has edged out Jet Airways as the second largest domestic airline in July with a with 20.9% share of the domestic market, ahead of Jet Airways-JetLite which, had a combined share of 19.6%.

That the price war and the frequent discount offers from has impacted other LCCs is reflected in the fact that market leader saw its share go down marginally from 31.6% in June this year to 30.7%. also saw a fall in its market share from 9.8% in June to 9.2% in July.    

also reported highest of 79.4% (67.9% in last July) in the industry, over ten%age points higher than and The market leader however saw its at only 67% (73.1% in July last year).  What is interesting is that  only reported a rise in market share in July and its share of domestic traffic rose from 18.3% in June. and which had reported a steady monthly increase in their market share from January to June, saw a drop for the first time this year in their market share.  Air India market share also fell from 18.5% in June to 18% in July. And Air Asia which has only eight flights in a day opened its account with a market share of 0.5% in July.  
 
The success has been propelled primarily by its frequent discounted offers, analysts aid. They say that by selling fares lower than their cost price they are only increasing their losses. The airline has reported a net loss of Rs 124 crore in Q1 FY 2015 following a Rs 1,000 crore loss last fiscal. The airline's auditors too expressed over its financial health and airline came under scanner for delays in paying statutory dues. Over the last few months has been holding flash sales with a view to encourage forward bookings. While industry saw the repeated sales as an attempt to mop up cash the airline management refused to talk on cash crunch.

Market share comparison for July. Figure in brackets indicates June figure
 
Air India - 18.0 (18.5)
 
Jet Airways - 15.7 (15.3)
 
JetLite - 3.9 (4.3)
 
- 20.9 (19.0)
 
- 9.2 (10.1)
 
- 30.7 (31.6)
 
AirCosta - 1.1 (0.9)
 
AirAsia - 0.5  (0.2)
 
Source - DGCA 
 
All figures in percentages

"Our increase in loads and share is the result of our new network, improved branding and product, and most importantly, our dynamic pricing and revenue management approach where we believe flying empty seats, which is the ultimate perishable commodity, is a waste especially for budget airlines," said chief operating officer in a statement.

“Our increase in loads this year has not been at the expense of yields. We are doing what is best for the airline, and it is a happy win-win-win that it is also best for customers,'' he added.

Last week Kapoor had remarked that the airline was not blindly discounting fares and was simply following global market simulation practice. "World over, all low-cost airlines do it," he said.

However the stock market has not responded to the up beat mood of the company. For instance the shares of fell from Rs 19.20 in July 1st to Rs 13.80 on July 31st, the period in which it has shown an increase in its market share  

"July is a low season for all airlines and it is not surprising to see level dip in that month. Even which shows high levels of has shown a seat factor of 67%. What is it that did to achieve the high seat factor? It defies logic,'' remarked a senior executive of rival airline.

Kapil Kaul of Centre for Asia Pacific Aviation said " Sustained pricing actions have led to higher load factors. The key is to ensure that such pricing initiatives are revenue positive. The first quarter results had closer to 10 percent yield increase which is positive but challenge is to make positive revenue growth in Q2 which is a very weak demand period. Going forward the targeted revenue management will be key. Significant easing of Brent crude oil price is another positive and will help in recovery."

image
Business Standard
177 22