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May: a good month
During May 2011, domestic airline passenger volumes grew by 15% YoY
18% MoM to 5.5m passengers (a new record) following a weak April.
Seat factors fell 40bps YoY despite a sharp 1000+ bps MoM increase.
Fares are softening again somewhat as the summer holiday season
wanes but remain above 4Q levels. Whilst profitability is likely to remain
weak in 1H, margins should recover QoQ. The recent moderation in oil
prices should also support margins. The overall demand supply situation
remains favourable. We retain O-PF on Jet Airways.
May 2011: pickup in pax growth, healthy load factors
q Passenger traffic volumes grew by 15% YoY to 5.5m (+18% MoM), a new record
for monthly traffic. This was against a base of 22% growth in May 2010
q Industry level load factors stood at 84.4%, marginally below the 84.9% in May
2010 but well above the 73.5% seen in April. Capacity growth stood at 15% YoY
q Sequential load factor performance was strong across airlines with all carriers
seeing increases and industry load factors increasing 10.9%. The increase was
highest for Jet (+13.8%) and JetLite (+12.2%) and lowest for Kingfisher (+8.6%)
Market shares: Air India sees deterioration
q May saw the private carriers gain market share at the expense of Air India (13.2%
share, -2.2% MoM), which was hit by the pilot strike (its capacity fell 12% MoM)
q Jet and Jet Lite have a combined market share of 26.1% and are 610bps ahead of
Kingfisher. Jet saw a 100bps MoM increase while JetLite saw a 30bps increase
q Kingfisher retained its position as the single largest airline and 20% share, flat MoM
q Indigo, Spice Jet and GoAir together had market share of 40.7%, +1% MoM with
Spice Jet +0.6% while Indigo and GoAir saw +0.2% each
News, fares and outlook
q GoAir has ordered 72 A320 Neos while Indigo confirmed its 180 aircraft order
q Indigo will launch its international service on 1
st
September for Dubai, Bangkok and
Singapore with initial return fares of Rs9,999
q The aggressive pricing visible in 4QFY11 abated in April and fares have remained
well above 4Q levels since. However, there is seasonal softening visible
q The stronger pricing environment should drive a QoQ improvement in yields and
margins in 1QFY11
q Whilst domestic ATF prices have eased ~5% from their recent peak, they remain
high in absolute terms and continue to drag profitability. Further declines would aid
profitability and share price performance
q The overall demand-supply situation remains healthy with fleet capacity expected
to increase broadly in line with pax growth in FY12. Retain O-PF on Jet Airways
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
May: a good month
During May 2011, domestic airline passenger volumes grew by 15% YoY
18% MoM to 5.5m passengers (a new record) following a weak April.
Seat factors fell 40bps YoY despite a sharp 1000+ bps MoM increase.
Fares are softening again somewhat as the summer holiday season
wanes but remain above 4Q levels. Whilst profitability is likely to remain
weak in 1H, margins should recover QoQ. The recent moderation in oil
prices should also support margins. The overall demand supply situation
remains favourable. We retain O-PF on Jet Airways.
May 2011: pickup in pax growth, healthy load factors
q Passenger traffic volumes grew by 15% YoY to 5.5m (+18% MoM), a new record
for monthly traffic. This was against a base of 22% growth in May 2010
q Industry level load factors stood at 84.4%, marginally below the 84.9% in May
2010 but well above the 73.5% seen in April. Capacity growth stood at 15% YoY
q Sequential load factor performance was strong across airlines with all carriers
seeing increases and industry load factors increasing 10.9%. The increase was
highest for Jet (+13.8%) and JetLite (+12.2%) and lowest for Kingfisher (+8.6%)
Market shares: Air India sees deterioration
q May saw the private carriers gain market share at the expense of Air India (13.2%
share, -2.2% MoM), which was hit by the pilot strike (its capacity fell 12% MoM)
q Jet and Jet Lite have a combined market share of 26.1% and are 610bps ahead of
Kingfisher. Jet saw a 100bps MoM increase while JetLite saw a 30bps increase
q Kingfisher retained its position as the single largest airline and 20% share, flat MoM
q Indigo, Spice Jet and GoAir together had market share of 40.7%, +1% MoM with
Spice Jet +0.6% while Indigo and GoAir saw +0.2% each
News, fares and outlook
q GoAir has ordered 72 A320 Neos while Indigo confirmed its 180 aircraft order
q Indigo will launch its international service on 1
st
September for Dubai, Bangkok and
Singapore with initial return fares of Rs9,999
q The aggressive pricing visible in 4QFY11 abated in April and fares have remained
well above 4Q levels since. However, there is seasonal softening visible
q The stronger pricing environment should drive a QoQ improvement in yields and
margins in 1QFY11
q Whilst domestic ATF prices have eased ~5% from their recent peak, they remain
high in absolute terms and continue to drag profitability. Further declines would aid
profitability and share price performance
q The overall demand-supply situation remains healthy with fleet capacity expected
to increase broadly in line with pax growth in FY12. Retain O-PF on Jet Airways
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