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January: growth still strong
During January 2011, domestic airline passenger volumes grew by 21%
YoY (23% in Jan-10) but declined 5% MoM against the December peak to
4.9m passengers. Seat factors increased 300bps YoY but declined 480bps
MoM. Kingfisher was the only airline to see a MoM increase in load factors
and is now the largest single carrier (Jet remains the leader as a group).
Given the increase in ATF prices since October, airlines are facing cost
pressures. Near term pricing has come under pressure due to seasonal
softening and aggressive pricing by Air India. Whilst profitability is likely
to weaken in 4QFY11, the overall demand supply situation remains
favourable. We retain our O-PF stance on Jet Airways.
January 2011: strong YoY but sequentially soft
‰ Passenger traffic volumes grew by 21% YoY to 4.9m (-5% MoM) against a tough
base of 23% growth in Jan-11. MoM decline was less than the 9% seen in Jan-10.
‰ Industry level load factors stood at 80.4%, below the peak of 85.2% in December
but above the 77.4% seen last January.
‰ All scheduled airlines saw a sequential decline in load factors with the exception of
Kingfisher (+0.6% MoM). The decline was higher for the FSCs (-6.2-10.2% MoM)
and lower for LCCs(-3.7-5.2%).
Market shares: Kingfisher jumps ahead
‰ Jet and Jet Lite have a combined market share of 24.8% and are 530bps ahead of
Kingfisher. Jet lost 0.4% market share MoM and JetLite lost 0.2%.
‰ Kingfisher pulled ahead of Indigo and was the largest single airline with a 19.5%
market share, +0.9% MoM. Air India lost 1.3% MoM.
‰ Indigo, Spice Jet and GoAir together had market share of 39.9%, +1.1% MoM with
Indigo +0.6% and Spice Jet +0.5% while GoAir was flat.
‰ On a 3 month basis, Indigo has been the biggest market share gain (+2.4%) while
Air India has seen the biggest decline (-1.9%).
Fares and outlook
‰ After the seasonal spike, fares have settled back. Anecdotal evidence points to
increased promotional activity with special fares and return trip discounts on offer.
‰ Air India has reportedly been cutting fares in recent weeks. Two week forward fares
for the carrier seem to be below the level seen in August
‰ Domestic ATF price have increased 26-30% since October and 11% YTD. This,
coupled with sequentially lower yields, will likely dampen profitability for 4QFY11.
‰ However, the overall demand-supply situation remains healthy and Jet has taken
another fuel surcharge increase this week with other FSC’s likely to follow.
‰ We reiterate our O-PF stance on Jet Airways.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
January: growth still strong
During January 2011, domestic airline passenger volumes grew by 21%
YoY (23% in Jan-10) but declined 5% MoM against the December peak to
4.9m passengers. Seat factors increased 300bps YoY but declined 480bps
MoM. Kingfisher was the only airline to see a MoM increase in load factors
and is now the largest single carrier (Jet remains the leader as a group).
Given the increase in ATF prices since October, airlines are facing cost
pressures. Near term pricing has come under pressure due to seasonal
softening and aggressive pricing by Air India. Whilst profitability is likely
to weaken in 4QFY11, the overall demand supply situation remains
favourable. We retain our O-PF stance on Jet Airways.
January 2011: strong YoY but sequentially soft
‰ Passenger traffic volumes grew by 21% YoY to 4.9m (-5% MoM) against a tough
base of 23% growth in Jan-11. MoM decline was less than the 9% seen in Jan-10.
‰ Industry level load factors stood at 80.4%, below the peak of 85.2% in December
but above the 77.4% seen last January.
‰ All scheduled airlines saw a sequential decline in load factors with the exception of
Kingfisher (+0.6% MoM). The decline was higher for the FSCs (-6.2-10.2% MoM)
and lower for LCCs(-3.7-5.2%).
Market shares: Kingfisher jumps ahead
‰ Jet and Jet Lite have a combined market share of 24.8% and are 530bps ahead of
Kingfisher. Jet lost 0.4% market share MoM and JetLite lost 0.2%.
‰ Kingfisher pulled ahead of Indigo and was the largest single airline with a 19.5%
market share, +0.9% MoM. Air India lost 1.3% MoM.
‰ Indigo, Spice Jet and GoAir together had market share of 39.9%, +1.1% MoM with
Indigo +0.6% and Spice Jet +0.5% while GoAir was flat.
‰ On a 3 month basis, Indigo has been the biggest market share gain (+2.4%) while
Air India has seen the biggest decline (-1.9%).
Fares and outlook
‰ After the seasonal spike, fares have settled back. Anecdotal evidence points to
increased promotional activity with special fares and return trip discounts on offer.
‰ Air India has reportedly been cutting fares in recent weeks. Two week forward fares
for the carrier seem to be below the level seen in August
‰ Domestic ATF price have increased 26-30% since October and 11% YTD. This,
coupled with sequentially lower yields, will likely dampen profitability for 4QFY11.
‰ However, the overall demand-supply situation remains healthy and Jet has taken
another fuel surcharge increase this week with other FSC’s likely to follow.
‰ We reiterate our O-PF stance on Jet Airways.
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