Monsoon, consolidation and rising fares make budget carriers lose market share

22 September 2007

Three months after airline industry-wide consolidation started taking hold and fares began moving up, a combination of the monsoon low season and rising fares have resulted in falling load factors for India's low-cost carriers.

Load factor is the average number of people flown per flight. The steepest fall in load factor is reported by the country's largest budget airline, Air Deccan, which has seen its load factors dip from a high of 87.3 per cent in January to 65.7 per cent in July, the last month for which the data is available.

This is the largest dip for any Indian airline in that period. Deccan's market share of 20.6 per cent in January has also fallen to 16.1 per cent. It seems like now that those one-rupee tickets are gone, so have some of the low-budget passengers. To be fair though, weak load factors are being felt across the industry, though on a smaller scale.

SpiceJet, saw its load factor come down by nearly 5 per cent, and IndiGo by 1 per cent over the same period. Jet Lite, earlier Air Sahara, saw its load factor fall from 72.6 per cent to 68.3 per cent. GoAir was the only budget airline to increase its share, by 2 per cent over January.

Among full-service airlines, Jet Airways saw its load factor come down from 73.4 per cent in January to 66.5 per cent in July, while Kingfisher Airlines dropped from 67.3 per cent to 63.6 percent. Indian Airlines was the only full-service carrier to improve its load factor, 61.7 per cent to 66.2 per cent.

Directorate General of Civil Aviation (DGCA) figures show that full-service carriers marginally increased their market share in the last few months. The market share of Indian went up to 20.5 per cent in July, compared to 19.8 per cent in June. Market leader Jet increased its share to 22.7 per cent in July, compared to 22 per cent in June. Kingfisher increased its market share to 13 per cent in July, compared to 12.9 per cent in June.