Smaller airlines unlikely to claw back lost market share as COVID-19 hits passenger traffic

SpiceJet, GoFirst, Vistara and Air Asia are unlikely to regain lost market share in India in the next two to three quarters as IndiGo continues to dominate a sector that’s been ravaged by restrictions to control the spread of COVID-19, experts and analysts said.

“The dominance of IndiGo continues and they are aggressive in terms of their future plans as well. This is impacting the working of other airlines,” said Jagannarayan Padmanabhan, director and practice lead, transport and logistics, at CRISIL Infrastructure Advisory. “IndiGo maintaining a market share of around 55 percent is a given for the next two to three quarters.”

Caps on capacity utilisation and various other restrictions to control the spread of the pandemic have resulted in the four airlines burning more cash than IndiGo, Jagannarayan said.

The civil aviation ministry has set the cap on capacity utilisation at 50 percent of pre-COVID levels from 80 percent at the end of May and has increased the floor price on fares. However, if the number of air passengers does not pick up soon, these four airlines will continue struggling to regain market share and sustain operations.

The number of air passengers plunged in May as daily COVID-19 cases climbed to a peak during the second wave of infections.

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