IndiGo’s Market Share Decline in January Explained: Chart Beat

In January, IndiGo’s domestic passenger traffic increased by 16% year-on-year, but its market share dropped to 60.2% sequentially, marking its lowest share since the shutdown of Go First’s operations in May. According to Jefferies India, the decrease in IndiGo’s market share may be due to the impact of its aircraft grounding in Q4, while its peer, Air India, continues to build its fleet. The market share of the Air India group reached a recent high of 28.3% last month, compared to 27% in December.

Moving forward, investors will closely monitor fuel prices in the coming days as they play a crucial role in the profitability of airlines. Aviation turbine fuel (ATF) prices make up a significant portion of operating costs for airlines, and higher fuel prices can negatively impact profits. Despite a slight decrease in ATF prices month-on-month in February, Jefferies predicts that spot jet fuel suggests that ATF may remain stable next month.

The fluctuation in market share and the impact of aircraft grounding on IndiGo’s operations highlight the challenges and competition within the domestic aviation industry. As the industry continues to navigate through the effects of the pandemic, factors such as fuel prices and fleet expansion will continue to influence the performance and market position of airlines. As a result, stakeholders will closely follow developments in these areas to gauge the overall health and prospects of the aviation sector in the coming months.