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June: still growing
During June 2011, domestic airline passenger volumes grew by 18% YoY
but declined 3% MoM to 5.3m passengers following a strong May. Seat
factors fell 210bps YoY and 310bps MoM even as capacity has increased
20% YoY. Air India saw its market share increase 170bps MoM at the cost
of private carriers. Fares remain low amidst seasonal softness and a
recovery in sector profitability is only likely in 3Q. The overall demand
supply situation remains balanced. We retain O-PF on Jet Airways.
June 2011: pax growth and load factors healthy
q Passenger traffic volumes grew by 18% YoY to 5.3m (-3% MoM). This was against
a base of 20% growth in June 2010
q Industry level load factors stood at 81.4%, slightly below the 83.4% in June 2010
as well as the 84.4% seen in May 2011
q Capacity growth was 20% YoY, driven by the LCCs. MoM capacity was flat with
modest declines among the private carriers being offset by an increase by Air India,
which recovered from the pilot strike in May
q Sequential load factor performance was lower across airlines with all carriers seeing
declines and industry load factors falling 10.9%. The decline was sharpest for GoAir
(-6.9%) and Air India (-5.1%) and lowest for JetLite (-1.0%)
Market shares: Air India gains share
q June saw Air India (14.9% share, +1.7% MoM) gain market share at the cost of the
private carriers, as it recovered from the impact of the pilot strike
q Jet and Jet Lite have a combined market share of 25.5% and are 570bps ahead of
Kingfisher. Jet saw a 70bps MoM decline while JetLite saw a 10bps increase
q Kingfisher remained the single largest airline with 19.8% share, -20bps MoM
q Indigo, Spice Jet and GoAir together had market share of 39.7%, -1% MoM with
GoAir -0.5%, Indigo -0.3% and SpiceJet -0.2% MoM. Combined LCC market share
has remained in the 39-41% range through CY11
Fares and outlook
q Yields in the domestic market remain under pressure with competitive intensity
remaining high. This, along with the normal seasonal weakness in July-September
will keep profitability subdued in 2Q as well
q Profitability is only likely to recover in 3Q as seasonal demand rebounds and price
discipline emerges
q ATF price remain high (2% from their recent peak) and overhang profitability
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 �� ��
June: still growing
During June 2011, domestic airline passenger volumes grew by 18% YoY
but declined 3% MoM to 5.3m passengers following a strong May. Seat
factors fell 210bps YoY and 310bps MoM even as capacity has increased
20% YoY. Air India saw its market share increase 170bps MoM at the cost
of private carriers. Fares remain low amidst seasonal softness and a
recovery in sector profitability is only likely in 3Q. The overall demand
supply situation remains balanced. We retain O-PF on Jet Airways.
June 2011: pax growth and load factors healthy
q Passenger traffic volumes grew by 18% YoY to 5.3m (-3% MoM). This was against
a base of 20% growth in June 2010
q Industry level load factors stood at 81.4%, slightly below the 83.4% in June 2010
as well as the 84.4% seen in May 2011
q Capacity growth was 20% YoY, driven by the LCCs. MoM capacity was flat with
modest declines among the private carriers being offset by an increase by Air India,
which recovered from the pilot strike in May
q Sequential load factor performance was lower across airlines with all carriers seeing
declines and industry load factors falling 10.9%. The decline was sharpest for GoAir
(-6.9%) and Air India (-5.1%) and lowest for JetLite (-1.0%)
Market shares: Air India gains share
q June saw Air India (14.9% share, +1.7% MoM) gain market share at the cost of the
private carriers, as it recovered from the impact of the pilot strike
q Jet and Jet Lite have a combined market share of 25.5% and are 570bps ahead of
Kingfisher. Jet saw a 70bps MoM decline while JetLite saw a 10bps increase
q Kingfisher remained the single largest airline with 19.8% share, -20bps MoM
q Indigo, Spice Jet and GoAir together had market share of 39.7%, -1% MoM with
GoAir -0.5%, Indigo -0.3% and SpiceJet -0.2% MoM. Combined LCC market share
has remained in the 39-41% range through CY11
Fares and outlook
q Yields in the domestic market remain under pressure with competitive intensity
remaining high. This, along with the normal seasonal weakness in July-September
will keep profitability subdued in 2Q as well
q Profitability is only likely to recover in 3Q as seasonal demand rebounds and price
discipline emerges
q ATF price remain high (2% from their recent peak) and overhang profitability
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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