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Vistara, the Tata Sons-Singapore Airlines joint venture, sprang a surprise by occupying the No. 2 spot in domestic market share in India. The airline’s market share climbed to 10.4 percent in July, when it carried 1.01 million passengers.
This is the first time that Vistara has reached this position since starting services in January 2015 and comes within days of the media reporting its year-on-year loss widening to Rs 2,178 crore.
Vistara and Air India were the only two carriers that ferried more passengers last month than in June, with even IndiGo seeing a drop of 250,000 passengers in July over the previous month. Domestic air traffic was down 8 percent over the previous month.
In a market where low-cost carriers command an 80 percent share, it is an achievement for a full-service airline to become No. 2. The second spot in the Indian market has been up for grabs for a while now, with SpiceJet, Go FIRST and Air India occupying the position at various times so far this year. Vistara now joins the club.
The airline had almost reached its 2019 capacity last year when most airlines, including market leader IndiGo, were 18 percent short of their pre-Covid capacity.
A lot has changed over the past seven months, with IndiGo deploying its highest ever capacity in the market, a feat that Vistara too achieved in the last quarter. This was followed by a cap on SpiceJet’s operations due to safety issues and Air India reducing its presence since March.
In June, Vistara had carried just 10,000 passengers fewer than SpiceJet, which had reclaimed the No. 2 spot after four months. July has seen quite a swing for Vistara, which carried over 200,000 passengers more than SpiceJet. This was driven by a mix of capacity addition by Vistara and a drop in capacity by other airlines.
How have the market dynamics changed?
In an expanding market, the player that adds capacity typically gains market share. But the current times are different. SpiceJet, which occupied the No. 2 spot last month, tumbled to No. 5!
Vistara has been adding capacity in a stepwise manner, in line with its induction and strengthening of the market. July was the beginning of a traditionally lean quarter and airlines that have been stressed for funds have curtailed their schedules and deployed lower capacity, translating into fewer passengers carried, which means lower market share.
Well-funded Vistara seems to have sprung into action at this time to occupy the space that the competition vacated, and that’s coupled with the return of business traffic, which primarily drives metro routes. This combination helped push up traffic for the airline. When the market shrank by 800,000 passengers, Vistara carried 73,000 additional passengers in July.
Tail Note
Market share is just another number and every airline focuses on profitability, but market share growth has its impact in multiple ways. It spurs the sales force of the airline positively to push travel agents and the market to sell more seats and it becomes a well-oiled machine from there on.
This creates good recall for passengers who tend to explore and book the airline and more importantly, it pushes the carrier to maintain that position. For a listed airline, this could mean a jump in the share price, but for an unlisted one like Vistara, this could well be a way to demonstrate that it has been doing well irrespective of the financials.
Sister carrier AirAsia India shrank further, but Air India, with its aircraft coming back to life, is doing better in terms of both passengers and market share. If these numbers are any indication, this only strengthens the case for a merger of Air India and Vistara and take it to a dominating position in the market.
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Copyright © e-Eighteen.com Ltd All rights resderved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express writtern permission of moneycontrol.com is prohibited.