With the advent of low-cost carriers (LCC) in the aviation market, the number of fliers has significantly increased. As per reports, a record growth of over 8 per cent has been seen in the month of August as compared to July. Apart from cheap tickets, improved services, easy accessibility and new marketing strategies are some of the important reasons behind this growth. In absolute terms, around 5.2 million people availed services of these airlines in the month of July, which climbed up to approximately 5.7 million in just 30 days. However, on year on year basis, the jump was of around 5.31 per cent, with a total of over 41 million fliers. Carriers like SpiceJet, GoAir and IndiGo also got into competitive spirit, which lead to a fare war and ultimately in increased fliers.
GoAir with around 10 per cent market share continued offering seats at a low cost. This Wadia Group-owned airline is growing at a fast pace and is planning to launch international flights in the coming year. As per industry experts, travellers can see a few international destinations in the GoAir booking option list. It has recently commenced operations on a number of new routes including Odisha. With over 100 everyday flights to over 20 destinations in the country, it is one of the rare airlines to report in its financial books. It is expected that as soon as it starts global operations, these profit figures will go up.
IndiGo, Jet Airways and SpiceJet also gained a significant number of passengers in the previous month. This raised the load factor of different airlines, but it remained in the 70-80 points range as the increment was slight in the last few months. However, more than 80 per cent seats of SpiceJet aircraft were reserved in the previous quarter. This LCC has left behind the leading carrier IndiGo in terms of flight occupancy, but as far as market shares are considered, it is still on the third spot. If the progress graph remains the same, we can expect interesting twists and turns in the performance reports of all these carriers in the following quarter.
GoAir is a leading low-cost carrier (LCC) of India based in Mumbai, operating under the aviation foray of the Wadia Group. It serves over 20 cities of the country with almost 100 daily flights. This LCC keeps introducing discounts and offers on online air ticket booking to attract fliers from all across the country. It also introduced a number of new routes in its offerings, which has resulted in its increased traffic. The airline also gained significant market share, reaching a new high of around 10 percent in this quarter, as per the Directorate General of Civil Aviation (DGCA) reports.
The officials, in a report have given out the information that its passenger traffic grew by over 21 per cent – from 1.4 million to approximately 1.7 million – in this quarter. Further, it was revealed that the carrier carried around 6 lakh passengers in the month of June, which was 4.5 lakhs, last year in the same month. The addition of flights to non-metro routes is one of the significant reasons behind increase in the traffic, as stated by the company. The CEO, Giorgio De Roni, told that the company made a profit of more than INR 100 crores on revenue of around INR 3000 crores, in the financial year 2013, and followed the same trend this year.
It also registered a record departure of over 2000 last year after introducing flights to Nagpur, Pune and Kolkata. In June, the carrier experienced a positive growth and the numbers are looking promising. Commenting on the rising market share, the CEO said that a new approach to resource deployment, almost 70 per cent of the flights serving Goa, Pune, Nagpur, Patna and Srinagar, has proved to be beneficial for them. All these factors are the reasons behind the upsurge in GoAir booking in recent months.
Fliers who have travelled domestic in the year 2014 have enjoyed a series of domestic flight offers right from the beginning of the calendar. It has been raining discounts right from the go. Most of the regional carriers, be it full fledged ones or low-cost carriers (LCCs), all have joined the party and lucrative discounts. SpiceJet, one of the popular have led the pack in starting enticing opportunities for fliers. These have been quite a hit as witnessed from the upsurge in booking of tickets. Most of these discounted airfare have been flash sales of tickets that have lasted only for a few days.
Reason for Discounted Flight Fares
There have been quite some debate about the fact as to why the airlines were providing such offers. Travel experts have opined that a number of factors contributed to this step from the Indian aviation giants. There had been no such discounts in the last financial year, rather there was a stark hike in the price of air tickets. This had contributed to the fall in passenger flow in Indian aviation. All regional carriers apart from IndiGo and GoAir had been posting a loss. As a result, there was a host of IndiGo, SpiceJet and GoAir offers right from the start of the calendar.
Despite the best efforts of all the airlines, the net revenue of most of them failed to come back to profiting ways. Travellers made the most utilisation of SpiceJet and IndiGo offers, as found out from their flight bookings. Apart from this factor, the fact that foreign carriers like Singapore Airlines and AirAsia are making a foray in Indian aviation is an added reason. The Indian names would like to have a strong niche population so that they can compete the foreign heavyweights in the best possible way.
Fliers who are looking to book air tickets in the next few months can consider themselves lucky as it is expected that airfare is expected to dip down. This is mainly because of the fact that AirAsia and Singapore Airlines, two giant names in global aviation are almost on the verge of starting their services. The coming six months will be a testing time for Indian carriers and travellers are expected to reap the benefits of rising competition. Interestingly, both these carriers are backed by the Tata Group, who hold a significant portion of the stakes in both the ventures.
Tough Competition
This news of initiation of services of the two carriers has already created much ripples in aviation of the country. The year 2014 has been marked by a series of discounts and all the popular names including market-leader IndiGo have offered such flash fares. SpiceJet, a popular low-cost carrier has offered as many as seven rounds of discounts in the first four months of the calendar. This shows that the Indian airlines are gearing up for the fresh challenge. Once they begin their services, it is expected that airfare, like the price of an IndiGo or a GoAir flight ticket will sharply dip.
The Federation of Indian Airlines (FIA), headed by all the popular carriers operating in this sector have strongly opposed the fact that these foreign companies are being allowed to venture out in Indian aviation. It is a known fact that they are running through a bad phase as seen from their back to back losses. In such conditions, increasing the competition means that the situation will turn for the worse. However, their petition has been rejected by the governing bodies and it is expected that the foreign names will soon be allowed to start their operations.
