Tata-owned full service carrier Vistara was India's second largest domestic airline in July, beating Go First and Ajay Singh-led SpiceJet – which was ordered to cut flights by half amid a series of technical glitches.

Vistara's market share rose to 10.4% in July from 9.4% in June, according to data released by the Directorate General of Civil Aviation (DGCA). The airline achieved this milestone for the first time since it started operations in 2015. Tatas own 51% stake in Vistara, while the rest is held by Singapore Airlines.

Market share of SpiceJet declined from 9.5% in June to 8% in July. This comes after the aviation regulator ordered the budget carrier to restrict its flights to 50% of the number of approved departures for a period of eight weeks. In its interim order last month, the aviation watchdog had said that the airline failed to establish a safe, efficient, and reliable air transport service under the aircraft rules.

Low-cost carrier Go First's market share, too, contacted from 9.5% in June to 8.2% in July. IndiGo, India's largest carrier, commanded the biggest market share among domestic airlines at 58.8% in July compared with 56.9% in June.

The market share of Tata-owned Air India in the domestic sector rose to 8.4% in July from 7.5% in June. Air Asia, another Tata Sons-backed carrier, saw its market share decline to 4.6% in July from 5.6% in June.

Passengers carried by domestic airlines during January-July 2022 were 669.54 lakh as against 393.44 lakh during the corresponding period of previous year, thereby registering annual growth of 70.18%, according to DGCA data.

Vistara carried 10.13 lakh passengers in July compared with 9.92 lakh passengers in June. IndiGo carried 57.11 lakh passengers in July compared with 59.83 lakh passengers in June.

SpiceJet flew 7.76 lakh passengers in July compared with 10.02 lakh passengers in June. Budget carrier Go First carried 7.95 lakh passengers in July compared with 9.99 lakh passengers in June.

Earlier this week, Fortune India reported that domestic aviation traffic is expected to see fast-paced growth, but the upturn is unlikely to aid airlines’ recovery. High aviation turbine fuel (ATF) prices and the prevalent inflationary pressures will dampen earnings of airlines in the current fiscal, according to rating agency ICRA.

"Elevated ATF prices will continue to pose a major threat to earnings and liquidity profile of the airlines in the near to medium term. Also, the depreciation of the Indian rupee against the U.S. dollar (which adversely impacts lease rentals, maintenance cost and other overheads) will have a major bearing on the cost structure of airlines. This apart, likely near-term relaunch of Jet Airways and the entry of low-cost domestic carrier, Akasa Air, will further intensify the competition in the domestic aviation industry. The airlines’ effort to maintain and/or grow their market share will limit their ability to expand margins in an elevated fuel cost environment," ICRA notes.

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