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August: weak month
During August 2011, domestic airline passenger volumes grew by 18%
YoY but declined 5% MoM to 4.8m passengers amidst seasonal
weakness. Seat factors fell 50bps YoY and 340bps MoM even as capacity
has increased 19% YoY. Air India saw its market share increase 200bps
MoM at the cost of private carriers. Forward fares have begun to pick up
heading into the peak season in October but are still flattish on a YoY
basis despite an early festive season this year. While the demand supply
situation remains balanced, poor price discipline has prevented fares from
keeping pace with fuel and we expect a weak H2.
August 2011: pax growth healthy, load factors weak
q Passenger traffic volumes grew by 18% YoY to 4.8m (-5% MoM). This was against
a base of 10% growth in August 2010
q Industry level load factors stood at 72%, slightly below the 72.6% in August 2010
as well as the 75.4% seen in July 2011
q Capacity growth was 19% YoY, driven by the LCCs. MoM capacity was flat with
modest declines among the private carriers being offset by an increase by Air India
q Sequential load factor performance was lower across airlines. The decline was
sharpest for GoAir (-8.0%) and Indigo (-4.7%) and lowest for Air India (-0.8%)
Market shares: Air India continues to gain share
q August saw Air India (17.4% share, +2.0% MoM) gain market share at the cost of
the private carriers. Its market share has increased 420bps since May.
q Jet and Jet Lite have a combined market share of 26.3% and are 750bps ahead of
Kingfisher. Jet saw a 10bps MoM decline while JetLite saw flat market share
q Kingfisher remained the single largest airline with 18.8% share, -50bps MoM
q Indigo, Spice Jet and GoAir together had market share of 37.4%, -1.5% MoM with
GoAir -0.7%, Indigo -0.5% and SpiceJet -0.3% MoM. Combined LCC market share
has slipped 330bps since May although its still up 110 bps YoY
Fares and outlook
q Yields in the domestic market remained under pressure through August with
competitive intensity remaining high, signalling a weak 2Q performance.
q Fares have begun to pick in the second half of September as the festive season
approaches. However, YoY trends are still nearly flat despite the earlier festive
season this year and higher ATF prices, suggesting weak YoY performance in 3Q
q ATF price remain high (5% from their recent peak) and overhang profitability
q While the demand supply situation is healthy, price discipline remains poor and we
expect a weak H2. Our O-PF stance on Jet is driven by its below break-up valuation
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
August: weak month
During August 2011, domestic airline passenger volumes grew by 18%
YoY but declined 5% MoM to 4.8m passengers amidst seasonal
weakness. Seat factors fell 50bps YoY and 340bps MoM even as capacity
has increased 19% YoY. Air India saw its market share increase 200bps
MoM at the cost of private carriers. Forward fares have begun to pick up
heading into the peak season in October but are still flattish on a YoY
basis despite an early festive season this year. While the demand supply
situation remains balanced, poor price discipline has prevented fares from
keeping pace with fuel and we expect a weak H2.
August 2011: pax growth healthy, load factors weak
q Passenger traffic volumes grew by 18% YoY to 4.8m (-5% MoM). This was against
a base of 10% growth in August 2010
q Industry level load factors stood at 72%, slightly below the 72.6% in August 2010
as well as the 75.4% seen in July 2011
q Capacity growth was 19% YoY, driven by the LCCs. MoM capacity was flat with
modest declines among the private carriers being offset by an increase by Air India
q Sequential load factor performance was lower across airlines. The decline was
sharpest for GoAir (-8.0%) and Indigo (-4.7%) and lowest for Air India (-0.8%)
Market shares: Air India continues to gain share
q August saw Air India (17.4% share, +2.0% MoM) gain market share at the cost of
the private carriers. Its market share has increased 420bps since May.
q Jet and Jet Lite have a combined market share of 26.3% and are 750bps ahead of
Kingfisher. Jet saw a 10bps MoM decline while JetLite saw flat market share
q Kingfisher remained the single largest airline with 18.8% share, -50bps MoM
q Indigo, Spice Jet and GoAir together had market share of 37.4%, -1.5% MoM with
GoAir -0.7%, Indigo -0.5% and SpiceJet -0.3% MoM. Combined LCC market share
has slipped 330bps since May although its still up 110 bps YoY
Fares and outlook
q Yields in the domestic market remained under pressure through August with
competitive intensity remaining high, signalling a weak 2Q performance.
q Fares have begun to pick in the second half of September as the festive season
approaches. However, YoY trends are still nearly flat despite the earlier festive
season this year and higher ATF prices, suggesting weak YoY performance in 3Q
q ATF price remain high (5% from their recent peak) and overhang profitability
q While the demand supply situation is healthy, price discipline remains poor and we
expect a weak H2. Our O-PF stance on Jet is driven by its below break-up valuation
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