Three months in a row, Tata group beats IndiGo in capacity by ASK

In 2019, a controversy of sorts erupted when aviation consultancy CAPA said that IndiGo had overtaken Air India in seats on offer on international routes from India. While IndiGo did not comment or celebrate, Air India, then a government-owned entity, quickly clarified that Air India remains the market leader by capacity--since capacity is measured by ASK (Available Seat Kilometres). Capacity is always counted by ASK in the industry, while seats on offer and departures remain metrics considered more for understanding than calculation.

The time post then was very different, starting with the pandemic and Tata groups bid for Air India, the purchase of the remainder of stake from AirAsia Bhd in AirAsia India, and eventual merger of Vistara with Singapore Airlines on board. The next two months will see the culmination of long exercise that started during the pandemic.

Amidst the intermittent news on service quality, diversions, and hardware issues, the four Tata group of airlines have successfully pushed IndiGo in terms of capacity by ASK, even as IndiGo continues to rule the roost with passengers and departures.

The Available Seat Kilometres are calculated by multiplying the seats on offer with the distance of flight in kilometres. The long-range and ultra-long-range flights of Air India propel the airline in a league of its own. Air India with its 3,831 international flights offered capacity by ASK of 507,64,01,000, while IndiGo operated 7,169 international flights offering capacity by ASK of 367,89,93,000.

Numbers don’t lie

Data declared by Directorate General of Civil Aviation (DGCA) shows that the four Tata-owned airlines combined have slid past IndiGo in Capacity by ASK for three months in a row. The four airlines recorded 1% higher ASK than IndiGo in August. However, IndiGo remains a beast when it comes to departures and passengers and has an unassailable lead domestically, where it is more than double on seats, passengers and capacity by ASK.

In March 2022, India opened scheduled commercial traffic. In April 2022, IndiGo had 6% more capacity by ASK and almost double the departures and passengers.

In December 2019, before the pandemic started impacting various parts of Asia, the numbers were very different. Air India and Air India Express were both government entities in December 2019. So, this clubbing is indicative. IndiGo was 7% short of the capacity of what the four airlines together offered.

Over the last few months, IndiGo has increased capacity in the international sector while Air India-led airlines have focused on the domestic sector. A comparison from December 2019 to August 2024 shows that IndiGo has grown 34% by departures for domestic flights and 47% for international. Capacity by ASK has grown 41% and 68%, respectively, indicating additional expansion on the international routes. For Air India, the departures have remained the same but the capacity has gone up 13% for domestic and 25% for International. The strength in the Tata group of airlines is actually Vistara, which has grown massively. Its international departures in August 2024 were five times of December 2019, and it carried six times more passengers during the same period. On domestic routes, too, it is 1.5 times what it was pre-COVID.

What do they mean?

For Tata Group, it is an indication of what lies ahead. Unit economics improve with more capacity deployed. The group would want to effectively use its full-service and low-cost arms to take on the might of IndiGo, which is moving into the space that was exclusive to the Tata group of airlines. A new class of service named IndiGoStretch and widebody aircraft will be introduced in 2027.

For IndiGo, the higher capacity deployment makes a limited difference. It has time and again made it clear that it goes on its own path and plan rather than competition. On its own it's a beast: it had 79% more departures than the four Tata group airlines and carried 74% more passengers, with a 1% lower capacity by ASK.

Widebody and XLRs will change the game for IndiGo

In all fairness, the Tata group is folding from four into two and with a single Air Operating Permit, IndiGo will continue to maintain the lead in capacity as well as passengers and departures. Since the capacity calculation involves distance flown and seats, the longer the distance, the higher is the capacity by ASK. The induction of the A321XLR next year and the A350s starting 2027 will get IndiGo back in the race for capacity by ASK.

With multiple metrics at hand, the end game will be profitability with lower unit costs and higher average fares. How these factors will play out, with a revitalised SpiceJet and Akasa Air, will be curiously watched till the end of this decade.