You are here: Home » Companies
Business Standard

IndiGo, SpiceJet: Lower costs, higher capacity utilisation to boost Q2 nos

Analysts at Centrum Broking note that Brent crude prices declined sharply by 30 per cent YoY, while domestic ATF prices declined 32 per cent YoY, leading to lower fuel costs

Civil Aviation

Bharat Bhushan  |  Mumbai 

Domestic airlines to add 50 planes in FY17

Listed aviation players, (IndiGo) and SpiceJet, are expected to narrow their losses sequentially in the September quarter of FY21 (Q2FY21), as India gradually opened up its skies and unlocked the economy. Besides, mild appreciation of rupee during the quarter would aid non-fuel costs, say analysts.

According to industry reports, the early part of Q2 witnessed localised lockdowns, slot restrictions at major airports, and low consumer confidence due to rising incidence of Covid-19 cases. However, during the latter half, industry operated at 43-45 per cent of pre-Covid capacity in the month of September, which is twice the capacity seen in June.

In this backdrop, analysts at Prabhudas Lilladher believe and could have operated at 34 per cent and 36.4 per cent of Q2FY20 capacity, respectively.

“Average number of domestic passengers per flight too improved from 90 per cent in June to 98 per cent in September. With loads on charters and Vande Bharat flights fairly strong, we expect and to report sequential improvement of around 700bps in passenger load factors (PLFs) to 68.4 per cent and 76.1 per cent, respectively,” they noted in a sector preview report.

Given this, Prabhudas Lilladher expects yields – or average fare per passenger per mile -- to remain strong at 10 per cent and 7 per cent year-on-year (YoY) increase for and SpiceJet, respectively.

Those at Elara Capital, on the other hand, see the yield improving 20 per cent YoY for the former and 25 per cent for the latter “on improvement in airfares as the minimum airfares capped by the government is higher than the airfares last year, along with increase in domestic capacity from 30 per cent of pre-Covid in Q1FY21 to 45 per cent in July and August, and 60 per cent in September”.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, October 27 2020. 13:15 IST