As Jet’s woes mount, rival airlines cash in on the gaps in India’s aviation market
SpiceJetand Indigohave seen their share price rise by 60% and 14% respectively over the last month.
- In the absence of funds and with over $1 billion in debt, Jet’s fleet of airplanes has shrunk from 119 at the beginning of the year to a current size of seven planes as its been unable to pay vendors.
- Both SpiceJet and Indigo have moved quickly to expand their fleet and take over Jet’s cancelled flight routes.
Jet’s woes are its rival’s fortunes.
A decline in the highly competitive nature of India’s
In the absence of funds and with over $1 billion in debt, Jet’s fleet of airplanes has shrunk from 119 at the beginning of the year to a current size of seven planes as its been unable to pay vendors.
It has also been unable to retain employees and maintain its flight schedule. As a result, it has slipped to fourth place in terms of domestic market share. One less competitor in the market means that the existing airlines have one less airline’s low ticket prices to worry about.
Furthermore, both SpiceJet and Indigo have moved quickly to expand their fleet and take over Jet’s cancelled flight routes. Spicejet announced this morning that it was adding five more Bombardier Q400s to its fleet by June. Last week, it said that it was adding 16 Boeing 737s.
In fact, analysts estimate that SpiceJet could increase its operating capacity by 35% this year alone.
As recently as this week, Jet’s international operations were put on hold till at least April 18th. Concurrently, SpiceJet has taken over seven of the carrier’s international routes such as Hong Kong, Colombo and Kathmandu.
Meanwhile, Indigo announced 23 new flights last week, including international routes such as Mumbai-Jeddah and Mumbai-Abu Dhabi and domestic ones such as Mumbai-Indore and Mumbai-Patna.
What’s more, Jet’s employees are also joining its rivals owing to non-payment of salaries. In fact, according to IANS, Jet’s pilots have joined SpiceJet after taking a significant pay cut.
Jet’s continued trouble bodes well for SpiceJet and Indigo’s financial results. Both airlines are expected to report strong results for the quarter ended March. In the quarter ended December 2018, they reported an improvement in pricing power, which aided profitability.
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