Last year 55% of domestic passengers in India flew by a full service carrier and 45% by value carriers. This year the number was inverted — 55% flew by value carriers.
The shift has compelled the Full Service Airlines in India, to start re-thinking their business model and announcing plans to introduce ‘single-class, no-frills’ services and deploying considerable capacity to the Low Fare model — Jet Airways has started Jet Airways Konnect, Kingfisher has revamped and strengthened its ‘Red’ service, and Air India is planning to launch Air India Express on domestic routes.
The only value carrier that publicly discloses financials, Delhi based SpiceJet, has reported a profit of Rs. 263 million ($5.37 million) for the quarter ended June 2009 compared to a loss of Rs. 1,292 million ($26.37 million) for the same quarter last year.
The quarter also saw a capacity reduction of 13% by the Full Service Carriers Air India, Jet Airways and Kingfisher Airlines. However a capacity increase by value carriers IndiGo, JetLite, SpiceJet, Kingfisher Red and GoAir, reduce the overall domestic seat capacity decline to 8%. Reduction in capacity also helped improve the passenger load factor from 69% to 72%.
The first quarter remained weak for the domestic aviation sector in India with a 5% decline in passenger compared to last year. However June saw an increase of 5.5% in year over year traffic after a decline of 12 consecutive months.
SpiceJet highlights for the quarter ended June 30, 2009 vs. June 30, 2008
- 15% increase in Revenue from Operations.
- 24% reduction in Cost per Available Seat Kilometer.
- EBIDTAR improved from loss of INR 67 crore to profit of INR 121 crore.
- EBIDTAR margin improved from negative 15% to positive 23%.
- Net Profit after Tax of INR 26.3 crore compared to a Net Loss of INR 129.2 crore.
- 21% growth in number of passengers.
- 12% growth in Available Seat Kilometers.
- 8% growth in number of departures.
- Passenger Load Factor increased from 70% to 76%.
Sanjay Aggarwal, Chief Executive Officer, SpiceJet added
“We had a great quarter given the challenges the industry continues to face. We saw an increased acceptance of our service by the consumers. This helped in absorbing the additional 10% capacity that we deployed over last year. Our market share improved from an average of 10.4% during Apr-Jun’08 to 12.4% during the current quarter. We expect the yields to remain under pressure during the quarter July to September, which are traditionally weak months for travel.”