Aviation data hints at turbulence due to rise in ATF prices

On June 5, Interglobe Aviation said it had registered a consolidated year-on-year net loss of Rs 1,147 crore in the fourth quarter of FY 2020-21, which ended on March 31, 2021.

Nitin Agrawal
Moneycontrol Research

Indian aviation industry has hit turbulence and this is evident from the monthly numbers reported by major airlines for the month of May 2018. The turbulence is, primarily, caused by a significant rise in the aviation turbine fuel (ATF) prices resulting in an increase in airfares.

The industry grew less than 20 percent year-on-year (YoY) in May despite it being the holiday season. It was in fact, the first time in five months that the growth was below 20 percent. Industry load factor contracted 170 basis points (bps) month-on-month (MoM). This was due to substantial fall of 680 bps in revenue passenger kilometers (RPK).

Operating Statistics for May 2018

IndiGo
In May 2018, IndiGo’s market share expanded 120 bps over the previous month. But, it still grew lower than industry passenger growth of 15.8 percent (YoY). This was on account of a fuel surcharge the company added to airfares to offset the impact of rising ATF prices. It also led to a significant MoM contraction of 600 bps in RPK. Its available seat kilometers (ASK), however, was up 110 bps (MoM). Lower RPK and higher ASK led to 90 bps contraction in load factor.

SpiceJet
SpiceJet’s performance vectors were same as that of IndiGo’s. Passenger growth for the month was 14.1 percent YoY, lower than industry growth. Its RPK and ASK contracted 500 bps and 340 bps MoM, respectively. Load factor though stayed above 90 percent.

Jet – at a standstillJet Airways continued its struggle to gain market share which declined 100 bps MoM and was far from the peak of over 20 percent market share that it achieved in July 2014. Jet witnessed the slowest passenger growth of 1 percent in the month of May. Its RPK declined by 1,700 bps MoM and ASK declined 670 bps.

GoAir, a small player in terms of market share maintained its share MoM. Passenger traffic, however, witnessed a substantial decline of 1,680 bps MoM while RPK and ASK declined over last month.

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