By Satish Singh
India’s IndiGo airline has become the world’s third largest airline with a market capitalization of Rs.1.47 lakh crore, overtaking USAâs Southwest Airlines. Now USAâs Delta Airline is in first place in the world with a market capitalization of Rs.2.53 lakh crore, while Ireland’s Ryan Air Holding airline is in second place with a market capitalization of Rs.2.16 lakh crore.
Inter Globe Airlines is ranked fourth in the world with a market capitalization of Rs.1.47 lakh crore, while Southwest Airlines is ranked fifth with a market capitalization of Rs.1.44 lakh crore, Air China is ranked sixth with a market capitalization of Rs.1.21 lakh crore, Singapore Airlines and United Airlines are ranked seventh with a market capitalization of Rs.1.19 lakh crore respectively and Turkish Airlines is ranked eighth with a market capitalization of Rs.1.09 lakh crore.
According to the updated data of the Directorate General of Civil Aviation (DGCA), Indigo airline has a share of 60.2 percent in India’s aviation sector in terms of number of passengers, while Air India is in second place, with a share of 12.2 percent. Vistara’s stake is 9.9 percent and Air Asia’s stake is 6.1 percent. The total share of airlines flying under the Tata group is 28.2 percent. Among other airlines, Spice Jet’s stake is 5.6 percent, Akasa Airlines’ stake is 4.5 percent and other airlines’ stake is 1.5 percent.
In the month of March last year, Indigo Airlines was ranked 14th in the list of world’s airlines based on market capitalization, but Indigo overtook United Airlines in terms of market capitalization in December 2023, then, Air China Airlines in January 2024 & left Singapore Airlines behind in February 2024.
Indigo Airline’s shares have increased by 50 percent in the last 6 months, while in the last one year its shares have given a return of 102.55 percent to investors. At the same time, last month its shares gave a return of 18.25 percent to the investors. Since January 1 this year, its shares have given a return of 27.78 percent to investors.
IndiGo Airlines had announced the results for the December quarter of the financial year 2023-24 on February 2, 2024, according to which IndiGo’s net profit increased by 110.7 percent year-on-year to Rs.2,998 crore, compared to Rs.1,422.6 crore in the same quarter last year. Not only this, but Indigo had also registered a net profit of Rs.188.9 crore in the second quarter. For the first time in the last 5 years, an Indian aviation company has registered profit in the second quarter of any financial year, as the second quarter is considered a season of weak demand for the aviation industry.
Indian airline IndiGo becoming the third largest airline in the world in terms of market capitalization can be a matter of joy and pride. This can also be a matter of happiness for the investors investing in the stock market, because investors have earned a lot of money by investing in its shares, but this cannot be a moment of pride for the needy passengers, because even today, the number of needy passengers is high among the passengers traveling by air. For leisure travellers the cost of air tickets may not matter, but for those traveling to treatment a sick person or to contribute to a job, attend an important meeting, etc. The increase in ticket prices has become a cause of difficulty.
An analysis by travel website Ixigo showed that fares on some airlines have climbed as much as 39 per cent in the period from April 1 to 7 compared to the period from March 1 to 7. During this period, one-way fares for flights between Delhi and Bangalore have increased by 39 percent, while airfares from Delhi to Srinagar have increased by 30 percent. At the same time, there has been an increase of 12 percent in the airfare between Delhi and Mumbai and an increase of 8 percent in the airfare between Mumbai and Delhi. Only 1 IndiGo flight flies per day between Patna to Ahmedabad and Ahmedabad to Patna, whose fare in the month of April had reached the level of more than Rs.22,000, which is usually between Rs 6,500 to Rs 8,000. However, other airlines with 1 or 2 stops have fares below Rs.10,000.
Indigo Airlines, the country’s largest airline, has a fleet of more than 320 aircraft, which makes more than 1900 trips every day to domestic and international cities. However, IndiGo had a grounded fleet of 74 aircraft in December 2023. At the same time, 90 aircraft of Go First, SpiceJet, Air India and Vistara were standing on the ground. According to experts, more than 200 aircraft will be grounded in the next few months, whose number was 164 by December 2023.
In the year 2024, 150 new aircraft have been added to the fleet for domestic flights, which is 34 percent more than the new aircraft added last year. Nevertheless, this number is unable to meet domestic demands. The number of domestic passengers is increasing by 24 percent on year-on-year basis. In the year 2023, the total number of domestic passengers has increased to more than 15.2 crores.
This year the aviation industry is facing many challenges in increasing capacity in line with the demand. It is even using larger aircraft on domestic routes. Despite this, there remains a huge gap between demand and supply. Apart from IndiGo, due to frequent cancellation of flights of other airlines and strong passenger demand, air fares have already increased by 20 to 25 percent.
Passengers have to pay more for air tickets for domestic flights in summer. Right now, the prices of tickets of all the airlines going towards the hill stations are skyrocketing. Air ticket prices are expected to increase further during summer vacations. However, air ticket prices in India were much cheaper in the world 18 to 24 months ago.
According to Honourable Civil Aviation and Steel Minister Shri Jyotiraditya Scindia, the price of air ticket is decided on the basis demand and supply. Though, the Parliamentary Standing Committee, which works under the Aviation Ministry and makes recommendations to control the price of air tickets, has also stressed on stopping the increase in air ticket prices during holidays and festivals. Despite this, there is no possibility of reduction in the price of air tickets soon, because today many aircraft are standing on the ground and due to operational issues, the operation of the aircraft is also being cancelled.
(Author is Assistant General Manager (L&D) at State Bank of India, Ahmedabad. The views expressed are personal. He can be reached at singhsatish@sbi.co.in.)