SpiceJet is losing big time. Who is gaining at its expense?

SpiceJet was number two in domestic market share when the country went into lockdown. The airline recorded a mere 2.3% market share in August, carrying just 3.01 lakh domestic passengers. This comes at a time when the market continues to grow, and both IndiGo and Air India are holding record orders with deliveries planned until 2036. Indian domestic aviation saw 10.54 crore passengers between January and August, the highest ever during this period amidst a growth of 4.8% over 2023, which was thus far the best year for domestic aviation in India.

The airline shrank from 5.6% in January to 2.3% in August. The loss of 3.3% of the market share is being taken over by Air India group and IndiGo almost equally. Both have gained market share since January, with Air India (including Air India Express) which went up from 12.2% to 14.7% while IndiGo went up from 60.2 to 62.4%. For IndiGo, the gain is despite the AOG (Aircraft on Ground) situation, which arose in January due to the grounding of many Pratt & Whitney-powered planes.

A gradual drop in passenger numbers means the shift is gradual and slow, impacting fewer passengers, unlike Go FIRST’s demise when it had a 6.4% market share and carried 8.3 lakh passengers just a month before its closure. While the overall shift seems split between the two airline groups, a lot changes at route level dynamics.

Routes being pulled out

Data shared by Cirium, an aviation analytics company, exclusively for this article shows that SpiceJet has shrunk on multiple routes since the beginning of the year. The airline has 36 grounded aircraft, as per its own admission.

SpiceJet has shrunk on routes between Mumbai and Goa, to Port Blair from Chennai and Kolkata, and between Delhi and Bengaluru, along with southern connectivity between Chennai, Hyderabad, Bengaluru, and Kolkata. This has seen the airline almost pull out of Chennai, once its hub, when Maran’s owned a majority stake.

Interestingly, on specific routes, like Bengaluru—Kolkata, the total number of flights went up after SpiceJet pulled out, with Vistara adding the largest capacity. Likewise, capacity also increased on Delhi—Bengaluru—Delhi, with Air India and IndiGo adding flights. Likewise, its flights to Srinagar from Mumbai being pulled out had no impact as Akasa Air and Air India Express stepped in.

Few of the routes are seasonal, and thus, comparing January to September will not be like to like. Sectors like Delhi—Kandla or Bengaluru—Darbhanga have lost connectivity due to RCS—UDAN routes, while routes like Guwahati—Jaipur have seen Air India Express pitch in. Pondycherry, on the other hand, is relegated to a non-operational airport.

Will the rights and slots be held for long?

SpiceJet started the season with 1657 weekly domestic flights being approved. In no months, until now, has the airline operated anywhere close to this number. In July, the airline operated an average of 704 weekly flights, just 42.4% of its approved schedule. Over the last few scheduling seasons, the airline has had fewer and fewer approved slots. A non-utilised slot being held for long means fewer operational flights, which impacts airport revenue and passengers, as this could lead to higher fares due to paucity of demand.

Likewise, SpiceJet has also mentioned that it holds rights to lucrative international destinations, including London Heathrow and Sharjah,where bilateral rights are hard to come by and other airlines could benefit. The airline also holds rights to Hong Kong, Afghanistan, and Russia, amongst others, but that would not be in demand,

The government has followed different rules at different times based on the situation, and hence, there is no standard rule for dealing with such cases. More often than not, the government gives a long rope and lets the airline keep the slots as it helps with valuation. However, this is a trend and not a norm, and the government could make a different decision based on the market's needs.

SpiceJet's current domestic market footfalls stand at around 10,000 passengers a day. This includes some unique routes, which help the airline keep the fares higher and beat the industry averages. However, lately, its famed highest Load Factor statistics have taken a beating, an indicator that people have become more aware of the ongoing crisis and could seek alternatives where possible.

As the airline goes to the market looking for funds, it would be in a “holding pattern”, a term made famous by Vijay Mallya when he tried saving Kingfisher Airlines. The stakes are high even for the government since two major airlines and a handful of regional carriers have gone down since 2014. Mallya couldn’t, but can Ajay Singh do it?