Lower fuel prices have helped Indian carriers to reduces their combined losses by an estimated 30 per cent to $1.21-1.27 billion in financial year 2015, even as budget carrier IndiGo reported a record profit of $150-175-million during the period, says a report.
In fact, the combined $41-67 million net profit of low-cost carriers has helped domestic airlines reduce losses during the year, the Sydney-based Centre for Asia Pacific Aviation (CAPA) said in its 2016 outlook.
Low-cost carrier IndiGo, which controls more than a third of the domestic market, could grab 40 per cent of the market this fiscal and raise it to 50 per cent in just two more years, according to aviation consultancy CAPA.
IndiGo Airlines, which started operations in 2005-06 is already the market leader and the fall in fuel prices and rising demand for air travel could help the airline in its goal of market dominance, says the report.
The fuel price fall seems to have helped IndiGo more than any other Indian carrier as the airline has been preparing for market dominance for a long time.
CAPA has estimated strong growth in IndiGo's total revenue in FY15 at over $2.5 billion. "Based on projected growth this should bring it to within striking distance of Jet Airways' topline by the end of FY16. The carrier is estimated to have posted a record profit of $150-175 million in FY15 representing a net margin of 6-7 per cent," CAPA said.
IndiGo carried more than half the incremental domestic passengers in FY15 and its market share soared to 36.4 per cent by March. Second largest carrier Jet Airways was a distant second at 25.4 per cent.
IndiGo, which started operations in 2005-06 with an order for 100 Airbus 320 aircraft, today took delivery of the 100th aircraft from this order.
IndiGo has since placed a second order with Airbus for 180 A320neos in 2011, and has gone ahead and placed yet another order for 250 more of these aircraft.
With an operational fleet of 96 aircraft, IndiGo offers over 600 daily flights connecting 38 destinations.
To further expand, the airline is expected to go for a public offer soon to raise up to $400 million by offloading up to 25 per cent equity.
On the international routes, however, Jet Airways along with partner Etihad had 75 per cent of the incremental market share in 2015, according to the CAPA report.
Overall, the consultancy said, last fiscal saw over 20 per cent growth in international operations of Indian carriers against an industry average of 10.2 per cent. CAPA estimated combined losses lower at $680-750 million for FY16 against $1.2-1.7 billion in the last financial year.