IndiGo market share soars to new heights in March while SpiceJet struggles

InterGlobe Aviation Ltd, the parent company of IndiGo, saw a 90 basis point (one basis point is one-hundredth of a percentage point) sequential increase in market share to 56.8% in March, marking a six-month high. In stark contrast, SpiceJet Ltd’s market share plunged to a fiscal year low of 6.4%, down from 12.7% in March 2018.

A series of setbacks over the past three-four years, including the grounding of Boeing 737 Max fleet, delayed aircraft deliveries, the pandemic, and surging crude oil prices, have weighed heavily on SpiceJet’s performance. 

Analysts at Jefferies India met the management of SpiceJet where the company has outlined plans to expand its cargo business, increase its presence in smaller towns, and grow its international market share.

It remains to be seen if SpiceJet’s efforts to expand its presence yield meaningful results and boost its market share. “SpiceJet has recently raised loans that will be used for working capital and un-grounding of aircraft; the company aims to un-ground its grounded fleet over 6-12 months and may also procure aircraft under its long pending order for 150 Boeing Max aircraft,” said the Jefferies report.

The real challenge for IndiGo may come from the Air India group, which held around 25% market share in March, and newcomer Akasa Air, whose market share increased by 30 basis points sequentially.

While the competitive landscape in the sector intensifies, IndiGo appears well-positioned for the long term. Investors seem to agree, with IndiGo shares rising nearly 5% in the past year, while SpiceJet’s shares have fallen by 41%.

To be sure, both companies have reported losses for FY23 so far. In the nine-month ended December, IndiGo and SpiceJet reported net loss of Rs1,233 crore and Rs1,520 crore, respectively. However, IndiGo’s robust balance sheet and market leadership provide a buffer in a challenging industry.