Low-cost carriers IndiGo, SpiceJet and GoAir to report record profits in 2019-20: CAPA

The three leading Indian low-cost carriers (LCCs) -- IndiGo, SpiceJet and GoAir -- are each expected to report record profits in 2019-20, airline consultancy firm CAPA said in a report on Thursday. Moreover, the domestic capacity, which has been lost as a result of Jet Airways' closure in April, should be restored by the end of September, it said.

It added that the growth in domestic capacity would then resume in the second half of 2019-20. "The three leading Indian LCCs - IndiGo, SpiceJet and GoAir - are each expected to report record profitability in FY2020," the Centre for Asia Pacific Aviation (CAPA) said in its report 'CAPA India Quarterly Market Insights'.

"IndiGo alone could be on track to report a profit of USD 400-500 million. Meanwhile, the combined fleet size of Indian LCCs is expected to cross 500 aircraft this year," CAPA added. Overall, the domestic traffic growth will be "muted", with full-year traffic growth expected to be below five per cent year-on-year, it said.

CAPA said that after Jet Airways' shutdown, "recovery in the international sector may take 1-2 years". According to CAPA, international traffic is likely to remain "flat at best", and could show a decline of up to five per cent.

Jet Airways had "temporarily" shut down its operations on April 17 this year as it had ran out of funds. Since then, the lessors have taken back their planes from the beleaguered full-service carrier and its domestic slots, as well as international rights, have been given temporarily to other airlines by the central government. A large number of aircraft, which were taken back by Jet Airways' lessors due to non-payment of dues, have now been leased to SpiceJet.

As a result, CAPA said, "SpiceJet is strengthening and emerging as the clear number 2 airline in the market. Within 12 months, its domestic market share could approach 25 per cent, a size that accords it strategic importance in the sector." "This is a tremendous achievement for an airline that was within hours of closure less than five years ago," it said in the report.

The closure of Jet Airways has left a notable gap in the international market, it said. "As a result of Indian carriers – particularly IndiGo and SpiceJet, but also GoAir – will increase their focus overseas," the report said.

Indian LCCs are expected to deploy 40 additional narrow-body aircraft on regional international routes in 2019-20. "In the race to fill the space left by Jet Airways, decisions on some new routes may be rushed," the airline consultancy firm said.

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