Who stands to gain from the IndiGo fiasco?

IndiGo, India’s largest carrier by fleet and market share, is reaching a new low with each passing day over the last few days. Today, the airline has cancelled all domestic departures from Delhi, and this has been followed at various other airports until various time slots today. The airline seems to aim at a total reset of operations, accounting for crew, planes and sectors from where it can operate starting tomorrow without such an impact going forward. With over 2,200 daily flights and 400 planes, the network and reach of IndiGo is unmatched. That is precisely the reason that the meltdown of operations has been unprecedented, with no other carrier in a position to pick up the slack left behind by IndiGo. At 65% market share, IndiGo carried just under 4 lakh passengers daily within India.

A large number of IndiGo routes are monopoly routes. Data shared by Cirium, an aviation analytics company, shows that IndIGo operates scheduled services on 1,526 sectors, 595 of which are monopolies, leading to the crippling and collapse of services on one-third of the total IndiGo network. A little over 200 routes are duopoly, while the rest have multiple carriers operating. IndiGo’s initial deadline of 48 hours went for a toss as the cancellations continued on the third day and the operations came to a standstill.

SpiceJet, Air India, Air India Express: Which will gain the most?

SpiceJet has been in the news for all the wrong reasons. However, the airline is now operating additional flights and is the saviour for many passengers. SpiceJet is operating close to 30 additional departures across sectors, not only domestic but on some international routes, to cater to the stranded passengers. The last-minute fares, obviously, are higher than what passengers would have booked in advance. This would be the much-needed additional cash which SpiceJet can generate at short notice. IndiGo’s problems may be their own doing partially and not linked to cash shortage, but SpiceJet absolutely knows what a ground stop is, having faced that in 2014. SpiceJet has recently augmented its fleet and added a handful of damp-leased planes along with ungrounding its own planes, giving it the ability to add flights at short notice. The addition is significant for an airline which is a shadow of its past.

Air India is a big gainer from the IndiGo fiasco. The airline has a strong presence on metro routes, with it being neck and neck or higher in terms of seats and frequencies between the key metro routes in India. A ground stop for IndiGo flights at metro airports means Air India can sell more seats or the remainder of the seats at higher fares. Friday evenings typically see higher load factors and yields. Flights on many metro sectors are sold out right now.

Air India Express stands to gain the most with 93 of the 212 duopoly routes seeing Air India Express as the other carrier, followed by Air India, which is present on 59 routes. Together, over half the duopoly routes are with the Air India group. The group is in the process of adding flights and could see Air India deploy its widebody capacity wherever possible to clear the backlog of people at airports and obviously gain from the situation.

SpiceJet overlaps on 26 routes where there is a duopoly while Akasa Air overlaps at 14 routes. Star Air and Alliance Air have eight and 12 routes where they operate along with IndiGo but the smaller capacity on offer may make little impact for either the passengers or the airlines.

Tail Note

There is no winner in the entire situation; there are only losers and that starts with the lakhs of passengers who are stranded across the country with no hope of reaching home or their intended destination at their planned times. There is little additional capacity in the market available with other carriers and airlines like Air India could operate widebody aircraft to clear the rush at the airports. While the fares may not be optimum, it may help passengers get home.

The repercussions of this fiasco will be long term for IndiGo, its rivals, the regulator and passengers.

The author, Ameya Joshi, is an aviation analyst.