Triumph for Vistara, turbulence for Akasa as domestic air traffic rises in August

While the going has been great for Vistara, it was the opposite for Akasa Air, which was celebrating its first birthday month in August. The airline lost passengers and market share and also ceded ground to SpiceJet, thus becoming the last among the major carriers in India. In a market which is growing, it flew one lakh passengers less than the previous month losing one percent market share. The airline also saw its cancellation rate go up to 1.17 percent, the highest amongst major carriers in the country. For benchmarking, AirAsia India had the lowest cancellation rate at 0.03 percent while market leader IndiGo had a cancellation rate of 0.59 percent in August.

Vistara’s push

In April this year, Vistara came closest to SpiceJet’s load factor with a difference of 0.1 percent and missed being on top by a whisker. Vistara has been knowingly or unknowingly chasing load factors and has consistently been above IndiGo. High load factors can be obtained by lowering fares, provided there is demand. With Vistara not being listed, it may be difficult to know the results of this strategy and compare vis-a-vis IndiGo, but the fact that the airline has continued following this path indicates that things have been successful or better than before.

Vistara, set to merge with Air India, has nothing to lose right now and is probably looking for a home run and a performance with which it can bow out in style. After cornering a double-digit market share at the start of the year and being number two in India, the airline lost out to Air India for the next couple of months, until August.

Akasa’s slide

Akasa has been fighting an uphill battle in August with a spate of cancellations affecting passengers. The airline has made multiple network changes, which has seen it reduce or move out of markets which it began in its early days. Largely believed to be due to the availability of slots at Mumbai and Delhi due to the suspension of Go FIRST, the lack of pilots angle also came to the fore last month.

The airline is also in the middle of reconfiguring its aircraft, which will see it add significant capacity to the market without actually adding a single aircraft to its fleet. The airline’s battle has just begun. Air India Express adding more aircraft, SpiceJet adding more wet leases and IndiGo continuing its expansion along with the demand for pilots going up means that Akasa Air will be under pressure in the market. Additionally, the surprise set of slots which were available with Go FIRST’s suspension may be up for grabs across airlines and Akasa Air may get a small share of that.

Tail Note

One would think that Akasa Air would find it hard to regain the market, but Indian consumers are price-sensitive and would shift loyalty for price unless the operations are coming to a standstill. In the case of Akasa Air, the reconfiguration of aircraft and resolution of pilot issues should help the airline deploy capacity again but that is likely to impact its yields as it attracts passengers. As we get into a good season, the yields may be better than current but would possibly be lower than what could have been the case with a stable operation during the festive season when many passengers were impacted in the southern states of India.

For Vistara, the uncertainty over the merger has not impacted the ground operations, going by the numbers it is posting. In all probabilities, this could be the last August for Vistara, with next August it being part of Air India and not a separate entity. With its future assured but not clear, the airline has little to lose in terms of proving how good an airline it was and joining the ranks of Air Deccan, which merged with Kingfisher Airlines, and Air Sahara, which was bought by Jet Airways.