Indigo market share reaches new high in March while SpiceJet struggles

InterGlobe Aviation Ltd, IndiGo’s parent company, saw a 90 basis point (a basis point is one hundredth of a percentage point) sequential increase in market share to 56.8% in March, which was a six-month high. In contrast, SpiceJet Ltd’s market share declined to a fiscal year low of 6.4% from 12.7% in March 2018.

A series of setbacks over the past three-four years, including the grounding of the Boeing 737 Max fleet, delayed delivery of aircraft, the pandemic and a spike in crude oil prices, have taken a toll on SpiceJet’s performance.

Analysts at Jefferies India met SpiceJet’s management to outline the company’s plans to expand its cargo business, expand its presence in smaller cities and increase its international market share.

It remains to be seen whether SpiceJet’s efforts to expand its presence yield meaningful results and increase its market share. “SpiceJet has recently taken loan which will be used for working capital and un-grounding of aircraft; The company aims to un-ground its grounded fleet in 6-12 months and may also purchase aircraft under its long-pending order of 150 Boeing Max aircraft,” the Jefferies report said.

The real challenger to IndiGo could come from Air India Group, which had around 25% market share in March, and newcomer Akaasa Air, whose market share grew 30 basis points sequentially.

While the competitive landscape in the sector intensifies, IndiGo appears to be well positioned for the long term. Investors seem to agree that IndiGo shares have gained nearly 5% in the last one year, while SpiceJet shares have declined 41%.

To be sure, both the companies have reported losses for FY23 so far. In the nine months ended December, Indigo and SpiceJet reported net losses of Rs 1,233 crore and Rs 1,520 crore, respectively. However, IndiGo’s strong balance sheet and market leadership provide a buffer in a challenging industry.