Aviation Industry

Comprehensive
Pack

Table of Contents
Glossary

:3

Domestic Traffic

:8

International Traffic

: 18

Competitive Analysis

: 30

Future Outlook
Domestic Traffic

: 48

International Traffic

: 59

Glossary

Glossary
Available Seat Kilometers (ASKM): Passenger seats in aircraft x
Distance flown in kilometers.
Revenue Passenger Kilometers (RPKM): Number of fare-paying
passengers x Distance flown in kilometers.
Passenger Load Factor (PLF): RPKM / ASKM, expressed in per cent.
Operating expenses per ASKM: Average operating expenses

incurred per kilometer, measured in Rs per available seat kilometer.

Operating revenue per ASKM: Average revenue earned by an airline
per kilometer of capacity available.

Passenger Service Fee (PSF): A tax authorized by the government,

assessed by airports and collected by airlines (on behalf of airports) as
an add-on to the passenger airfare.
4

Glossary
Air Operator's Certificate (AOC): Approval granted from the
National Airworthiness Authority (NAA) to an aircraft operator to

allow them to use their aircraft for commercial purposes.

Block hours: Time period from when an aircraft leaves the source
airport to its arrival at the destination airport.
Capacity: Maximum number of aircraft, cargo, or passengers that
can be accommodated in an aircraft.
EBITDAR: Earnings of airline companies before deducting interest,
tax, depreciation, amortization and rental on aircraft.
Full service carrier (FSCs): Airlines which offer on board services
such as food, in flight entertainment and other amenities.
Low fare carrier (LFCs): Airlines which offer basic services of
carriage at cheaper prices than FSCs.

Glossary
Hub and spoke system: A system that enables an airline carrier to increase
service options at all airports covered by its system.
It entails the use of a strategically located airport (the hub) as a passenger
exchange point for flights to and from outlying towns and cities (the
spokes).
Non-scheduled services: Revenue flights not operated as a scheduled

service, such as charter flights and all non-revenue flights.

Scheduled services: Services based on published flight schedules of airlines.
Open Skies Agreement: An agreement between two airlines in two

countries, which enables unlimited destinations, unrestricted capacity and

frequencies, unrestricted operational flexibility, fair opportunity to compete,
open cooperative marketing arrangements (code sharing) between the two

signing countries.

Glossary
Stage length: Distance travelled by an aircraft from takeoff to
landing.
Average stage length is computed as the ratio of aircraft kilometers
to aircraft departures.
Wide-body aircraft: Aircraft with more than one aisle in the
passenger cabin.
Examples of wide-body aircraft include the Airbus A330, A340,
A350 and A380; the Boeing B-747, B-777, B-787.
Yield: Average revenue earned per RPKM.

Domestic Traffic

Domestic passenger traffic grew strongly in 2014-15

In 2014-15, domestic air traffic grew strongly by 16 per cent y-o-y
to 70 million passengers due to improvement in economy coupled
with aggressive discounts.
In 2014-15, GDP improved by 7.3 per cent vis-a-vis 6.9 per cent in
2013-14.
On the other hand, domestic ticket prices declined by about 3 per
cent during the year, due to increasing competition on account of
entry of new players such as AirAsia.

Domestic passenger traffic on an upward trajectory

10

Competition intensified but PLFs improved due to capacity

discipline
Entry of new players intensified competition in domestic airline
industry. During the year, three new players entered into the market
- AirAsia, Air Costa and Vistara.
Entry of new players resulted in price wars between the existing
players as most players opted for aggressive discounting.
As a result, ticket prices on domestic routes declined in 2014-15.
However, despite new entrants and intense competition, domestic

PLFs improved to 79 per cent compared to 73 per cent a year ago.

This is because of the capacity discipline followed by players as
evident from ASKMs which increased only by 4 per cent (compared

to a 6 per cent in a year ago period).

11

Competition intensified but PLFs improved due to capacity

discipline
Even new entrants including Air Asia and Air Costa had measured
capacity additions, resulting in healthy domestic PLFs of 74-75 per
cent in 2014-15.

12

Note: AirAsia and Vistara commenced flying operations in 2014-15, while Air Costa
commenced in 2013-14

13

 During 2014-15, ASKMs increased by 4 per cent as compared to a 12

per cent increased in RPKMs.
As a result, utilisation gap declined to 18 billionkm in 2014-15 from

21 billion-km in 2013-14.
Improvement in demand resulted in PLFs increasing to 79 per cent
in 2014-15 from 73 per cent a year ago.

14

Domestic market share of carriers (based on RPKM)

15

Share of LFCs in ASKM increased

Industry capacity (measured by ASKMs) grew by 4 per cent in 201415, primarily owing to expansion by Indigo, GoAir and Air India.
The ASKM of LFCs - IndiGo, GoAir, SpiceJet, Air Asia, Vistara and
Air Costa - rose by 2.7 per cent y-o-y to around 52.4 billion-km in
2014-15.
The share of LFCs increased by about 200 bps y-o-y to 62 per cent of

the overall capacity.

Capacity expansion by LFCs and Full Service Carrier (FSC) Jet
Airways focus on international operations (post Jet Etihad deal)

resulted in share of LFCs in ASKM to rise.

16

Player-wise ASKM

Note: New entrants includes AirAsia, Air Costa and Vistara

17

International Traffic

18

International passenger traffic grew by a moderate 8 per cent in

2014-15
In 2014-15, international traffic (Indian and foreign carriers) in
India grew around 8 per cent to 51 million passengers.
This was on account of improvement in economy coupled with
about 1-2 per cent decline in the international ticket prices.
Further, international traffic carried by Indian carriers increased
strongly by around 23 per cent y-o-y to 17 million passengers led

by Air India and Jet Airways.

Air India and Jet Airways constitute around 85 per cent of the
international passenger traffic carried by Indian carriers.

Jet Airways' strategy of increasing focusing on international

operations, post its alliance with Etihad Airways contributed to
increased passenger traffic.

19

International passenger traffic grew by a moderate 8 per cent in

2014-15
Air India's entry into the Star Alliance post July 2014 provided
access to new markets and destinations with other member airlines,
thereby increasing passenger traffic.

20

International passenger traffic (domestic and foreign carriers)

in India

21

Share of Indian carriers' in international traffic rose in 2014-15

Air India, the national carrier, traditionally dominated international
traffic from India.
With the entry of private players, the market share of Indian carriers
vis-a-vis foreign carriers on international routes (defined as the
proportion of passenger traffic carried by the carriers to and from
India) gradually improved.
In 2014-15, the overall market share of Indian carriers increased to
about 34 per cent from 30 per cent in 2013-14, despite stiff
competition from foreign carriers.
Increasing focus on short-haul international routes by largely
operating direct flights and minimising travel time on routes that
foreign carriers catered to so far, albeit with a layover enabled
domestic players to gain share.

22

Share of Indian carriers' in international traffic rose in 2014-15

23

Share of Indian carriers' in international traffic rose in 2014-15

During 2014-15, Air India was the largest domestic carrier [as
measured by RPKMs performed].
The carrier accounted for around 52 per cent of the total
international RPKMs serviced by Indian carriers.
During the same period, Jet Airways share remained stable to 40
per cent.

24

25

Share of private carriers in international passenger traffic rose

over the past few years
Expansion by Jet Airways other LFCs like Indigo and SpiceJet
helped private carriers' share of total international passenger
traffic, improved to 48 per cent in 2014-15 compared to 39 per cent
in 2009-10.
On the other hand, Air India's market share declined to 52 per cent
in 2014-15 from 61 per cent in 2009-10 owing to financial
difficulties coupled with stiff competition faced by the airline.

26

Share of international passengers carried by private and stateowned carriers (based on pax kms)

27

PLFs for Indian carriers on international routes marginally

improved
During 2009-10 to 2014-15, the RPKMs grew at CAGR of 6 per cent while the
ASKMs grew by 4 per cent.

As a result, the overall PLFs of Indian carriers improved to 79 per cent in

2014-15 from 71 per cent in 2009-10.
In 2014-15, the industry's capacity (ASKMs) on international routes

increased by 18 per cent y-o-y, driven by capacity expansion by Air India

and Jet Airways.
Post the Jet Etihad deal, Jet Airways increased its frequency on short-haul

routes such as Dubai, Abu Dhabi, Doha to India.

The industry RPKMs during the same period increased by 19 per cent y-o-y.
As a result, PLFs improved to 79 per cent in 2014-15 from 78 per cent a year

ago.

28

Pax-km and ASKM of Indian carriers on international routes

29

Competitive Analysis

30

Low fuel price, strong demand and new entrants trigger fare war
The aviation industry in India has turned into a fierce battlefield.
Players are vying with each other on fares, quality of service and
connectivity, especially between smaller cities.

Low fuel prices, strong demand and entry of new airlines have
enabled both low fare/cost carriers (LFCs or LCCs) and full service
carriers (FSC) to offer attractive discounts.

As expected, with AirAsia India's entry, competition has heated up.

For instance, in June 2015, AirAsia India announced fares as low as
Rs 1,299 on Bengaluru to Goa, Pune, Kochi, Vishakhapatnam routes.

GoAir joined the bandwagon and rolled out low ticket prices at Rs
1,299, to preserve its market share.
AirAsia India to continue strong discounts during its initial years to

grab market share.

31

Low fuel price, strong demand and new entrants trigger fare war
This would strain domestic LFCs, especially SpiceJet, as both
airlines are primarily focused on servicing the southern region.
Airlines typically slash ticket prices during lean seasons (second
and fourth quarters) to attract demand.
However, discounts have been doled out, even for peak holiday
seasons, which reflects intense competition.

Airlines offered steep discounts not just for medium-term travel

dates but also distant travel dates.
A case in point is GoAir, which in June 2015 launched an offer of Rs

999 for distant travel dates in January-April 2016.

32

Indigo holds the largest market share domestically

As of first half of 2015-16, Indigo holds the largest share in domestic

RPKMs at 40%.
Indigo also scores well on reliability in terms of on-time
performance and cancellations (as given below).

33

Reliability measure for airlines on domestic passenger traffic

Note: We measured reliable airline service based on two key factors - average on-time
performance and cancellation rate from January-June 2015
34

New entrants to garner about 15% share by 2020-21

Given the entry of new players, existing players will find it tough
to maintain their market share.

By 2020-21, new entrants including Vistara, AirAsia India, Air

Costa and Air Pegasus to collectively constitute about 15% of
market share (in terms of revenue passenger kilometres or RPKM).

New entrants to capture about 25-30% share of the incremental

RPKM.
This is because PLF gap between existing players and new entrants

is expected to gradually narrow over the next five years.

35

Players' market share (based on domestic RPKM during H1 201516)

Note: New entrants include Air Asia India, Vistara, Air Costa and Air Pegasus
36

Vistara to focus primarily on premium segment

Vistara, the TATA-SIA joint venture which commenced operations
on January 9, 2015, aims to capitalise on the void left by the exit of
Kingfisher Airlines in the premium segment.
Vistara to focus primarily on the premium segment and not indulge
in a fare war.
This is evident from the fact that Vistara offered a discount hardly
once in H1 2015-16.
It introduced 20% discount for purchase until April 5 and for travel
between April 1 and 30 June.
In a highly price-sensitive market such as India, LFCs have a strong
role to play.
However, gradually, the price gap between LFCs and FSCs is
narrowing.

37

Vistara to focus primarily on premium segment

Hence, there is sufficient room for all players to expand.
Air travel penetration is India is hardly one-tenth of that of
emerging countries such as Malaysia and Brazil.

38

AirAsia India to follow discounted pricing, ticket prices to

normalise in long run
AirAsia India enjoys slightly lower interest cost than other highly
debt-ridden domestic airlines, which gives it room to offer lower
fares in a price sensitive market.

However, the airline will not be able to trim its operating costs over
the longer run on account of limited levers (airport charges and fuel
cost being similar across airlines) available at the airline's disposal

vis-a-vis other airlines.

Hence, do not expect its pricing to vary significantly from that of its
peers in the long term.

With AirAsia India following a discount-driven pricing strategy in

the near term, existing players are matching fares on competing
slots and routes with limited inventory.

39

AirAsia India to follow discounted pricing, ticket prices to

normalise in long run
Moreover, AirAsia India has been launching direct flights between
smaller cities, thereby addressing the existing void.
It was the first to announce a direct flight between Pune and Jaipur

and offered big discounts in the initial phase.

40

Air Pegasus and TruJet may not change market dynamics

Newly-launched regional carriers to focus primarily on southern
India and may not change market dynamics.

Bengaluru-based Air Pegasus, which commenced operations on

April 12, 2015, focuses primarily on the southern region.
Promoted by Dcor Aviation (ground handling service provider in

South India), Air Pegasus connects Hubli, Trivandrum, Madurai and

Cudappah.
Though Air Costa and Air Pegasus operate largely in South India,

there are no major overlapping routes.

However, Air Pegasus to compete directly with SpiceJet, since both
airlines operate on some similar routes.

41

Air Pegasus and TruJet may not change market dynamics

In July 2015, Directorate General of Civil Aviation (DGCA) granted a
permit to Turbo Megha to operate TruJet as a regional airline.
TruJet, promoted by Hyderabad-based aviation entrepreneur Umesh
Vankayalapati and Telugu movie actor Ram Charan Tej, commenced
operations on July 12, 2015.
The airline has two ATR-72 aircraft on lease.

TruJet to compete with regional carriers Air Costa and Air Pegasus
for a pie of air traffic from tier II and III cities in South India.
Both Air Pegasus and TruJet operate 70-90-seater aircraft.

Use of low capacity aircraft on low-density routes helps operators

maintain healthy PLF and curb maintenance costs.

42

Air Costa awaits national permit; more airlines keen to enter

bandwagon
Regional carrier Air Costa received No Objection Certificate (NOC)
for pan-India flying permit in December 2015.
It now awaits the Air Operator Permit (AOP) to commence pan-

India operations.
Any development on this would remain a key monitorable as it can
further heighten competition.

In 2014-15, the Ministry of Civil Aviation granted no-objection

certificates to other airlines too, which await AOP :
Premier Airways, Air One Aviation Pvt. Ltd and Zexus Air seek to

become national airlines.

43

Air Costa awaits national permit; more airlines keen to enter

bandwagon
Easy Air, promoted by Premier Airways, is likely to be launched as a
low cost airline.
The airline is expected to commence operations with leased Airbus

A320 aircraft by the end of this year.

Air One already runs charter operations with about half-a-dozen
business jets and helicopters, and is likely to be based in Delhi.

Flyeasy, which is in the process of getting a regional flying permit, is

likely to go for an upgrade to national licence.
Air Carnival and Zav Airways plan to operate as regional airlines.

44

Future Outlook: Domestic Passenger Traffic

45

Air travel penetration in India is extremely low

46

Air travel penetration in India is extremely low

Air travel remains highly sensitive to GDP growth and ticket prices.

Between 2011-12 and 2013-14, air traffic remained muted due to

economic slowdown.
With Kingfisher Airlines exiting the industry, traffic dropped after

2012-13 as other airlines chose to improve profitability by raising

ticket prices, instead of ramping up capacities.
In 2014-15, air traffic rose 16% owing to economic revival and

discounts offered by airlines.

Going forward, air traffic to record a CAGR of 12-14% between
2015-16 and 2020-21, higher than the past five-year CAGR of 9%.

47

Domestic passenger traffic growth to witness strong momentum

48

Domestic passenger traffic growth to witness strong momentum

Receding cost pressures and intensifying competition are likely to arrest
sharp price hikes over the long term.

Crude oil prices, which rose 27% between 2008-09 and 2013-14, declined
21% in 2014-15.
Over the long term, crude oil prices to remain low at $55-60 per barrel

over the long term due to continued rise in global supplies, subdued
growth in demand and no production cuts by OPEC.
Though the rupee depreciated marginally versus the US dollar in H1FY16,

over the long term the rupee may not mirror trends seen between 2008-09
and 2013-14 when the local currency weakened by 32% versus the US
dollar.

Moreover, better airport infrastructure is needed to facilitate long-term

growth.

49

Domestic passenger traffic growth to witness strong momentum

Over the last few years, modernisation of Mumbai and Delhi
airports and commissioning of greenfield airports in Bengaluru and
Hyderabad significantly improved the turnaround and productivity

among airlines.
However, to ease pressure on the existing facilities, even large
greenfield airport projects, including Navi Mumbai, Goa and

Nagpur, need to be commissioned on schedule.

50

Near-term PLF to surge despite new entrants...

The number of airlines operating in domestic skies doubled from

five in March 2013.

The recent entrants are Air Costa, Vistara, Air Asia India and Air
Pegasus.

Air Pegasus got a flying permit in March 2015 and commenced

operations on April 12, 2015.
Regional carrier TruJet received a flying permit in July 2015 and
commenced operations from July 12, 2015.
Despite new entrants and intense competition, aggregate passenger
load factor (PLF) is expected to increase by about 300 bps to 82% in
2015-16 triggered by strong demand, players' well-thought capacity
additions and SpiceJet's fleet reduction.
51

Near-term PLF to surge despite new entrants...

SpiceJet was forced to ground flights for some days in December
2014 after its vendors refused to offer credit.
In the first eight months of 2015-16, PLFs increased to 81-82%.
During this period, existing and new players (including AirAsia
India and Air Costa) reported healthy PLF of >75%.
Vistara was struggling with PLF of below 70%.

52

PLF of new entrants to match that of existing players in the long run

53

LCC to account for most of the capacity additions

LCCs (primarily Indigo) to account for most of the capacity
additions measured in terms of overall domestic available seat
kilometres (ASKM) - by 2020-21.
The 180 A320neo aircraft ordered in 2011 are scheduled to be
delivered from 2016 to 2023.
In October 2014, Indigo placed a large order for 250 A320neo aircraft
from Airbus; these planes are scheduled to be delivered from 2018
through 2026.
In March 2015, Indigo received the government's nod to import 400
aircraft by 2025.
GoAir ordered 72 A320neo aircraft in 2011 which are scheduled to
be delivered from 2015 to 2020.
54

LCC to account for most of the capacity additions

Players such as Indigo and GoAir to continue expanding operations
on domestic routes by increasing flight frequencies on current
routes and adding new cities to their itinerary.

55

New entrants to account for about 15% of capacity in 2020-21

By 2020-21, new entrants - AirAsia India, Air Costa, Vistara and Air
Pegasus - to collectively constitute about 15% of the deployed
capacity.
Their debt-free balance sheet is expected to fuel capacity additions.

56

New entrants to account for about 15% of capacity in 2020-21

Among new entrants, Vistara to account for a larger share of fleet additions
Though Vistara was launched seven months after AirAsia India,
Vistara has more aircraft (seven) than the latter.
AirAsia India indicated that it will not be on an expansion spree

unless the government's directive on 5/20 rule gets finalised.

Vistara's fleet expansion to be more aggressive.
The airline has highlighted that it intends to expand to 20 aircraft by

2018.

57

Fleet expansion plans of new entrants

58

Future Outlook: International Passenger Traffic

59

International passenger traffic to record 10-12% CAGR

60

Highest international passenger density to remain on India-Dubai

route
The India-Dubai route is expected to continue to be the leading
international route (currently constitutes about one-fifth of the total
international traffic).
It

predominantly

includes

business

travellers

and

Indian

expatriates in Dubai, who undertake frequent trips to India (a

sizeable non-resident Indian (NRI) population works in the Middle
East).
Growth is aided by increase in flying rights to Dubai.
Effective February 2014, the weekly seat entitlements between India
and Dubai were hiked by 11,000 seats from 54,200 seats.
Other heavy overseas traffic routes include India-London, IndiaBangkok and India-Singapore.

61

Highest international passenger density to remain on India-Dubai

route
According to the Government of India, trade between India and
UAE crossed US$59 billion in 2014-15, making UAE one of India's
top trading partners.

In September 2015, UAE and India agreed to boost bilateral trade by

60% over the next five years.
Improvement in trade ties would translate into increase in air travel

of business delegates between India and Dubai.

Vistara too has highlighted the Gulf region as one of its key markets
when the 5/20 rule gets abolished.
The airline has starting preparing itself.
It opened its first overseas sales office in Dubai to tap business
travellers and Indian expatriates.

62

Highest international passenger density to remain on India-Dubai

route
In August 2015, Vistara appointed UAE-based Sharaf Travels as its
general sales agent for the Gulf Cooperation Council (GCC), to sell
services and tickets for services within India.

63

Alliances with foreign airlines drive domestic carriers' growth

In the first eight months of 2015-16, international passenger traffic
for domestic airlines increased by about 9% y-o-y.
Growth was primarily supported by Jet Airways' strategy of
increasing focus on international operations after its alliance with
Etihad Airways.
Following the Jet-Etihad deal, Jet Airways (which constitutes 40% of

international passenger traffic by domestic carriers) acts as the

feeder aircraft for Etihad Airways for west-bound flights from India.
Jet Airways operates over 50 daily flights to multiple destinations in

the Gulf from India.

64

Alliances with foreign airlines drive domestic carriers' growth

International passenger traffic for domestic airlines to increase 9-

11% and 10-12% in 2015-16 and 2016-17 respectively, supported by

economic growth, alliances and expansion of Indian low fare
carriers (LFCs) on short-haul routes.

Following the Etihad alliance, Jet Airways has been enhancing

international connectivity with the addition of new destinations and
flights in Gulf.

For instance, effective March 2015, Jet Airways introduced flights

from Ahmedabad, Mangalore and Pune to Abu Dhabi.

65

International passenger traffic to record faster growth in long run

66

Jet Etihad alliance - key driver for international passenger traffic

growth
Over the long term, international passenger traffic carried by Indian
airliners to increase at 10-12% CAGR to 31 million passengers by 2020-21.
Greater focus on international operations by domestic airliners and many

operational agreements signed between domestic and international

airliners would be the growth drivers.
The Jet-Etihad alliance would be a key driver for international passenger

traffic growth.
The alliance is estimated to add passenger traffic between India and Gulf
countries.

67

Jet Etihad alliance - key driver for international passenger traffic

growth
In April 2015, Jet Airways entered into a code share agreement with
Air Berlin, Germany's second largest airline, in which Etihad
Airways holds 29.2% stake.
Code share with Air Berlin helps Jet Airways connect Berlin and
Dusseldorf via Abu Dhabi.
Air India's entry into the Star Alliance post July 2014 is expected to

provide further access to new markets and destinations, via a codesharing agreement with other member airlines.
Star Alliance has about 28 member airlines, covering 195 countries

and 1,328 airports worldwide.

The alliance would also provide seamless services and improve
convenience for passengers.

68

Jet Etihad alliance - key driver for international passenger traffic

growth
The arrangement would boost Air India's long-haul international
operations.

Having 19 aircraft and over five years of operational experience,

GoAir is close to commencing international operations, as per the
5/20 rule by adding one aircraft.

On the flip side, Tiger Air terminated its interline agreement with
SpiceJet for flights to Singapore in January 2015.
Singapore Airlines, a 49% stakeholder in Vistara, is also the largest

shareholder in Tiger Air, with a 56% stake.

69

Share of domestic airlines in international passenger traffic

70

Share of domestic airlines in international passenger traffic

Over 2015-16 to 2020-21, Indian carriers to broadly retain 33-35% share in
international passenger traffic due to the following reasons:
(a) Increasing focus on short-haul international routes by operating direct
flights and minimising travel time on routes that foreign carriers catered
to so far, albeit with a layover would help domestic players combat stiff
competition from foreign carriers.
For instance, Air India plans to operate a direct nonstop flight from either
Delhi or Bengaluru to San Francisco.
Currently, foreign and domestic carriers are operating on the same route
with a layover of minimum two-three hours.
The draft aviation policy released in October 2015 indicated that the
government would open the skies for short-haul routes effective April 1,
2020.

71

Share of domestic airlines in international passenger traffic

Open skies for short-haul routes could potentially invite intense
competition from Gulf carriers.
However, as this would be implemented effective April 2020, it
would not have any material impact during our forecast period.
(b) At present, the Indian government indirectly protects domestic
carriers through a bilateral air agreement between India and foreign

countries by not granting additional weekly seat entitlements.

For instance, for travel to Gulf regions such as Dubai and Qatar from
India, foreign carriers are almost nearing their peak seat entitlements

while it is unutilised for Indian carriers.

Though foreign carriers are demanding higher weekly seat
entitlements, it has not been granted by the government.
72

Domestic carriers to expand capacity primarily on short-haul routes

In the first eight months of fiscal 2016, the industry's capacity
deployed (available seat kilometres or ASKM) on international

routes increased by 8% yo-y.

Most of the capacity was expanded by Jet Airways to act as a feeder
aircraft for Etihad Airways for west-bound traffic from India, post

its deal withEtihad.

Bulk of capacity expansion was on short-haul routes.
Jet Airways increased its frequency on short-haul routes such as

Dubai, Abu Dhabi, Doha to India.

Over the next few years, Jet Airways to follow a similar trend of
expanding capacities to the Gulf countries.
73

Indigo's upcoming A320neo aircraft could be deployed on shorthaul routes

Considering Indigo has only single-aisle aircraft in its fleet (99 A320
fleet), it would only operate on short-haul routes to the Middle East
and South-East Asia.

Given that the upcoming A320neo is also single-aisle aircraft, expect

some of these aircraft to be deployed on short-hauwel international
routes.

Indigo's 180 A-320neo aircraft, which were ordered in 2011, are

expected to be start deliveries at the end of this year and continue
until 2023.

Indigo placed a large order of 250 A-320neo aircraft in October 2014,

the deliveries of which are scheduled to commence from 2018 and
continue to 2026.
74

Indigo's upcoming A320neo aircraft could be deployed on shorthaul routes

With Jet Airways focusing more on adding flights to the Gulf from
India, LFCs expanding capacities on short-haul routes continually
and Air India entering into the Star Alliance, total capacity to
increase 12-14% to 135 billion km by 2019-20.
As a result, passenger load factor (PLF) is expected to remain steady
at 76-78% over the next five years.

75

International capacity and PLF to record sharp rise over next five
years

Note: Our projections factor the current applicable 5/20 rule, which implies that new
entrants cannot currently fly on international routes.
76

Foreign carriers too set to expand substantially

Emirates, Qatar Airways, Air Arabia, Saudi Arabian Airlines, Oman
Airlines, Singapore Airlines and Lufthansa collectively constitute 4550% share among foreign carriers that operate on the international
route network to and from India.
Foreign carriers to significantly expand their capacities to cater to
rising demand.

Emirates, which holds about 10% share among foreign carriers

operating to and from India, launched additional flights between
India and Bangladesh.

Effective March 29, 2015, Emirates' weekly flights to Dhaka and

Kolkata increased to 21 and 13, respectively.
In March 2015, European airline Lufthansa announced plans to

launch long-haul budget carrier Eurowings to destinations in India. 77

Foreign carriers too set to expand substantially

Qatar Airways announced expansion plans in India, with
significant increase in capacity on flights from Doha to Bengaluru.
It is also exploring the possibility of entering into a joint venture
with a domestic carrier.

78