NEW DELHI: At a time when one airline is left at the mercy of the government and another is in immediate need of fund infusion to remain operational, IndiGo, the budget carrier run by InterGlobe Aviation, is perhaps the only major player that seems to be beating the blues of aviation sector.
The airline recently inducted the 200th plane in its fleet — a first by an India airline firm. Its stock rating was upgraded to ‘Overweight’ from ‘Equal-weight’ by Morgan Stanley (MS) and is code-sharing with global airlines to expand its international footprint.
Even as IndiGo reported in the second quarter of FY19 its first-ever quarterly loss (of Rs 652 crore) since going public in October 2015, future prospects of cheaper fuel, strengthening of rupee and moderation in ticket prices are likely to help the financials of the career.
As for market share, IndiGo is slowly becoming the Maruti Suzuki of the skies. By the end of November, its market share stood at 43 per cent and given its aggressiveness in adding capacity in one of the fastest growing aviation markets, its market share is only expected to improve further.
However, with the stupendous growth, IndiGo is facing sectorial constraints too. “Not being able to hike fare during the peak period due to intense competition might affect its profitability in the short run. Investors are also cautious about the overall health of the sector,” an analyst said, not wanting to be named.
At latest, stocks of IndiGo was trading (at Rs 1,153.45 on BSE Friday) well below its 52-week high of Rs 1,520. Compare to the stocks of two other airlines — SpiceJet and Jet Airways — IndiGo’s stock has, however, moved northward in recent months.
While IndiGo is well poised to recover from the second quarter setback once favourable factors become more favourable, its involvement in unwanted controversies continues to affect its brand image. In less than a month since it sparked off wide anger when it said it would be charging for web check-ins (which it later denied), two weeks ago, a Kolkata-Jaipur IndiGo flight was involved in an incident that put the lives of 136 passengers at risk mid-air.
The aircraft used by the airline was the Airbus A320 Neo with a Pratt & Whitney engine, a type which has been frequently facing serious glitches mid-air and on ground since their induction.
The airline’s on-time performance, its USP, isn’t the best anymore. As per DGCA’s Data, GoAir led the industry with 87% punctuality rate at four major airports, followed by Vistara (86.1%) and IndiGo (79.2%).
But it is not just the passengers; the airline seems to have miffed authorities too. Recently, it had to move Supreme Court to challenge the Meghalaya High Court (MHC) order that asked it to finalise within a week the date of commencing flying operations to the state’s Umroi Airport at Shillong. The SC, on December 12, stayed the MHC Order. Earlier, in October, Tripura Chief Minister Biplab Kumar Deb had accused the airline of creating a monopolistic situation and jacking up airfares in the Northeast region.
According to the analyst quoted above, it’s a very ‘American’ way of running an airline where you don’t mind ‘little’ controversies. “You see IndiGo has shown how to remain profitable in a difficult sector. Unlike many airlines that offer freebies and go bankrupt, IndiGo runs on strict business principles,” he said, adding that a large portion of passenger complaints also come because of inadequate infrastructure at airports.
Falling ranks
IndiGo’s on-time performance, which had been its USP, isn’t the best anymore. As per Director General of Civil Aviation’s data, GoAir led the industry with 87 per cent punctuality rate at four major airports, followed by Vistara (86.1 per cent) and IndiGo (79.2 per cent)