The three leading Indian low-cost airlines—IndiGo, run by Interglobe Aviation Ltd., SpiceJet Ltd. and GoAir—are each expected to report record profits in 2019-20, airline consultancy firm CAPA said in a report on Thursday. Moreover, the domestic capacity, which has been lost as a result of the Jet Airways crisis, should be restored by the end of September, it said.
According to CAPA, the growth in domestic capacity would then resume in the second half of 2019-20. “IndiGo, SpiceJet and GoAir are each expected to report record profitability in FY2020,” Centre for Asia Pacific Aviation said in its report CAPA India Quarterly Market Insights.
“IndiGo alone could be on track to report a profit of $400-500 million. Meanwhile the combined fleet size of Indian LCCs is expected to cross 500 aircraft this year,” it added. Overall, the domestic air traffic growth will be “muted”, with full-year traffic growth expected to be below five percent year-on-year, it said. CAPA said that after the Jet Airways crisis, “recovery in the international sector may take 1-2 years”.
According to CAPA, the international traffic is likely to remain “flat at best”, and could show a decline of up to five percent. Jet Airways (India) Ltd. had “temporarily” shut down its operations on April 17 this year as it had ran out of funds. Since then, lessors have taken back their planes from the crisis-hit airline and its domestic slots as well as international rights have been given temporarily to other airlines by the central government.
A large number of aircraft, which were taken back by Jet Airways’ lessors due to non-payment of dues, have now been leased to SpiceJet.
As a result, CAPA said, “SpiceJet is strengthening and emerging as the clear No.2 airline in the market. Within 12 months, its domestic market share could approach 25 percent, a size that accords it strategic importance in the sector.”
“This is a tremendous achievement for an airline that was within hours of closure less than five years ago,” it said in the report. The Jet Airways crisis has left a notable gap in the international market, it said.
“As a result Indian carriers, particularly IndiGo and SpiceJet, but also GoAir will increase their focus overseas,” the report said. Indian low-cost airlines are expected to deploy 40 additional narrow-body aircraft on regional international routes in 2019-20. “In the race to fill the space left by Jet Airways, decisions on some new routes may be rushed,” the airline consultancy firm said.
