According to a report released by the Centre for Asia Pacific Aviation (CAPA), the three airlines IndiGo, SpiceJet, and GoAir, will register record profits in FY 2019-20. The report titled ‘CAPA India Quarterly Market Insights’ predicted that the reduced domestic capacity would revive by the end of September.
The domestic air traffic growth is expected to be 5% year-on-year, but international traffic growth is likely to remain flat or may drop up to 5%.
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, the report pointed out.
SpiceJet has leased majority aircraft of the grounded Jet Airways. Based on its expansion pace, CAPA said that the airline would emerge as the number 2 airline in the market. It may occupy a share of 25% in the domestic market. “This is a tremendous achievement for an airline that was within hours of closure less than five years ago,” CAPA said in the report.
GoAir will increase its focus on the international market. “In the race to fill the space left by Jet Airways, decisions on some new routes may be rushed,” the airline consultancy firm said.
India’s national carrier Air India may breakeven for the first time in a decade, according to the report. If the government pursues 100% divestment, moves all working capital debt into an SPV, and permits bidders greater flexibility with labour rationalisation, Air India may find a suitor this time around given the improved competitive dynamics resulting from Jet’s exit, CAPA India said in its quarterly market insights for April-June.
According to CAPA, Air India will expand both its narrowbody and widebody operations by taking aircraft on lease.
Air India will continue to face strong competition on domestic routes, but now that it has emerged as the largest carrier on overseas routes – where capacity is constrained -international operations could prove to be lucrative, CAPA added.