On Cloud Nine: Three airlines clocked their best performance ever in 2022

This is entirely 3D generated image: Image Ctsy Getty

According to data released by the Directorate General of Civil Aviation (DGCA) for 2022, domestic aviation has bounced back phenomenally from the early days of January 2022, when it looked like Covid would trip the march of the market yet again.

Airlines in India carried 12.32 crore domestic passengers in 2022, with December clocking the highest traffic —1.27 crore passengers.

The numbers were lower than in 2019 (the last full pre-pandemic year), but higher than 2017, when 11.71 crore passengers took to the air. In 2019, the industry had ferried 14.41 passengers across the country. However, with Covid, the traffic dropped to 6.3 crore in 2020 and 8.38 crore in 2021.

Intense battle for the number two spot

As many as four airlines occupied the number two spot in market share in 2022, even as IndiGo cornered 58.8 percent of the market in July. IndiGo closed the year with 56.1 percent market share. It’s dominance can be judged from the fact that no other airline had a market share in double digits.

Vistara closed the year at second spot with 9.2 percent market share, followed by Go FIRST at 8.8 percent. Air India and SpiceJet were tied at about 8.7 percent each, with the former carrying slightly more passengers than the latter.

Vistara has achieved remarkable growth in passenger numbers and seen higher load factors across the year. For the airline, 2022 is the penultimate full year of operations as it is slated to merge with Air India by March 2024. For many months of 2022, Vistara’s load factor was very close to that of SpiceJet. While SpiceJet has lost its long-cherished number two spot in Indian aviation, will it also lose its load factor leadership in the next few months? The gap between SpiceJet and Go FIRST and Vistara is now less than half a percent, and as Vistara increases utilisation, it could elbow out Spice Jet.

Best-ever numbers for IndiGo, Vistara, and Star Air

IndiGo flew 690.93 lakh passengers in 2022, by far its best performance. Clocking higher and higher numbers month after month, in December the airline carried 69.97 lakh passengers, its highest ever. There have been days when it has logged more than 1,700 flights.

Vistara, the TATA-SIA joint venture (JV), also recorded its best-ever performance. The airline flew 113.59 lakh domestic passengers in 2022.

Star Air, which is set to induct four E175s and become the first regional carrier to expand its fleet, also recorded its best-ever year carrying 2.31 lakh passengers. While the airline may not have gained much market share, it continued to defend its niche effectively.

For these three airlines, 2022 could also be the best-ever in terms of revenue as well.

Higher demand, fewer flights, and firm load factors

All airlines have been recording high load factors. Which is good, except that now we have a capacity problem.

As it stands today, India has fewer active planes than it did in 2019. While the industry operated 94,910 domestic flights in December 2019, the numbers stood at just 87,984 in December 2022. Carrying nearly the same number of passengers with 223 fewer flights a day is an achievement like none other, and shows the resilience of the industry.

What does the future hold?

In a few weeks we will know if IndiGo (and SpiceJet) made a profit in the bumper December quarter. Aviation in India is characterised by margins which are as thin as boarding passes. Costs are Dollar denominated and are adversely impacted when the Rupee slides, as it has from the beginning of 2020 till now, by about Rs 10. Fuel costs have remained very high after an initial slump during the pandemic. To top it all, the overcast global outlook is not making it any easier for airlines.

Traffic in January this year is only 2 percent lower than January 2020. The issue for the airlines though is that aircraft which were grounded are re-entering the fleet. Thus, while they were not able to deploy capacity in their best month (when they most needed it), now have capacity available when they may not need it quite as much due to tapering traffic.

For now, the silver lining is the return of pre-Covid seasonality. In 2020 and 2021, the traffic patterns followed the Covid waves. Even as the pandemic remains a threat the world over, luckily India has managed to duck it. If that holds in 2023, it can be the good old days once again.