After a turbulent April, domestic passenger traffic rebounded in May growing by 2.8% year-on-year to 12 million, according to brokerage firm Prabhudas Lilladher. With peak holiday season and incumbents led by SpiceJet and IndiGo accelerating their aircraft induction plans—in a bid to gain from Jet’s downfall—the industry reported a moderate capacity growth of 2.6%.

IndiGo inducted about 15 aircraft over April-May helping it grow 23% in domestic passenger traffic and 26% in ASK, or available seat kilometres, year-on-year, while enjoying a 49.2% market share.

Inducting about 25 aircraft over April-May, SpiceJet reported 24% growth in passenger traffic, carrying about 1.8 million. Its market share improved by 170 bps month-on-month to a five-year high of 14.8%.

Continuing to gain from the exit of Jet Airways, GoAir, Vistara, and AirAsia India reported passenger traffic growth of 31%, 23%, and 19%, respectively.

Industry load factor at a 16-month high

The industry operated at a 16-month high domestic load factor of 90% in May as compared to 88% in April. With domestic passenger load factor (PLF) at 94% in May, SpiceJet reported 90%+ PLF for the 49th consecutive month. IndiGo continued to report a strong PLF of 91% (as against 88% in April). Go Air, Vistara, and AirAsia India clocked in PLF of 93%, 86%, 89%, respectively.

Given the current environment of high yield, strong PLFs ensuing from Jet’s downfall and favourable ATF prices, we expect IndiGo and SpiceJet to sustain margin expansion and improved profitability, read the sector report by Prabhudas Lilladher. If the feud between IndiGo promoters results in any adverse regulatory outcome, it can impact growth and valuations, it added.