Industry consolidation continues

Although industry growth has slowed down considerably to ~5%, Indigo and SJ (SpiceJet) continue to capitalise on the vacuum left by Jet’s shutdown.

SJ has, in fact, grown at 9x industry, accounting for bulk of the slots vacated by Jet.

Higher yields despite falling oil prices

Although airline fuel prices have fallen, airlines have not passed on these savings to passengers.

Yields expected to rise 5%/3.5% at Indigo/SJ indicating a shift in pricing power to airlines post recent consolidation.

International expansion accelerates

International growth continues to accelerate at 70%/40% at Indigo/SJ as both the airlines continue to add new routes to Middle East and SE Asia.

Outlook: Industry growth to accelerate post slot reallocation

Over half of Jet’s slots have been kept in abeyance by the government in light of the company’s ongoing sale.

Although these slots are on low traffic routes compared to allocated slots, redistribution will add to industry’s passenger growth. SJ can potentially repeat its earlier success and gain the lion’s share of unallocated slots.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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