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Wings to Jhunjhunwala’s Dream Project may cause crash landings for existing enlisted and ill players such as
,Indigo) and as both the counters are hovering around their 52-week lows.
IndiGo is India’s largest airline with 55.5 percent market share as of January 2022.
IndiGo shares have retreated 32 per cent from their 52-week high, while SpiceJet has fallen as much as 55 per cent from its latest peak.
brokerage firm
The growing competitive intensity in the airline industry has reiterated a ‘Sell’ rating on IndiGo; Margin pressure, which is likely to limit the stock performance, given the spurt in ATF prices and rupee depreciation and Rakesh Gangwal’s decision to reduce his 36.6 per cent stake in the company over the next 5 years.
Elara Capital, on the other hand, has a ‘buy’ rating on InterGlobe Aviation but has lowered the target price to Rs 2,527 due to higher fuel costs, indicating a 50 per cent rise from its previous close.
We remain positive, given the company’s strong balance sheet, market leadership, which will help capture most of the domestic demand growth, strong GDP growth support and ramp-up of high margin international travel.
As stated by Akasa Air CEO Vinay Dubey, the RJ-backed new entrant is likely to make its maiden flight by the end of July 2022. Bookings can start in the first week of July.
Dubey has made his intentions clear that Akasa Air will have extremely affordable fares with top-notch customer services despite cost and near-term challenges. “The aviation industry around the world is very competitive,” he said.
The boom in the unlocked theme, despite motivating domestic and global travel, has market analysts worried as rising fuel prices, currency depreciation and aviation continue to challenge the recovery.
JM Financial said that the total market share Bye The group’s airlines accounted for over 22 per cent in April 2022 and the recent acquisition of Air Asia Air India Likely to provide greater synergy and higher competitiveness. “Competitive intensity in the region is expected to intensify with the addition of Akasa Air and
“Added it.
JM Financial said that with ATF prices hitting the all-time high, the profitability of the airlines will be affected. “Airlines may need to make further increases to offset the increase in ATF price, possibly reaching the point of demand elasticity in the travel industry.”
Due to the lifting of most travel restrictions after a two-year pandemic, air travel around the world has come down significantly. The Indian aviation sector will have to cope with the growing demand both domestically and internationally.
It’s not just leisure or leisure travel that has resumed. The reopening of offices has given a boost to business travel as people are coming off Zoom calls and hosting in-person events and meetings around the world.
Another domestic brokerage firm,
Said that the average daily fliers till date in June 2022 was 3.75 lakh, as against 3.68 lakh in the month of May 2022.
“The average number of daily departures remained stable at 2,821, 2 per cent MoM, and the number of fliers per departure remained stable at 133, indicating a stable PLF,” it added.
ICICI Securities said yields will be tested in Q2FY23 against a seasonally weak period and some correction potential. “IndiGo expects 55-60 per cent year-on-year growth in Average Seat Kilometers (ASK) in FY13.”
Several airlines are looking at adding more employees and aircraft to their fleets to meet the growing demand in the industry. This will increase their expenses and EBITDA margin in the near future.
Not only this, Jet Airways – the airline that has been stalled for more than three years – is looking for its revival by September 2022, increasing competition in the industry. The Jalan-Kalrock consortium backed company has received an operating license from DGCA.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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