List of Top Companies in Indian Airline Industry: The aviation industry in India is one of the fastest-growing industries and has claimed the third spot among the largest domestic markets in the world. Although the industry is struggling during COVID19, however, no depression lasts forever.
Today, we take a look at the future prospects of the Indian airline industry and the top companies in Indian Airline Industry in 2020.
Prospects of the Indian Aviation industry
This sector contributed close to $72 billion to Indian GDP and is en-route to also become the 3rd largest air passenger market by 2024. These bright prospects are mainly due to the untapped potential considering that air transport is still considered expensive for the majority of the country’s population which will change with the country’s economic growth. Today we
The Indian government realizing this potential has allowed 100% FDI in these sectors. Investments over 49% will, however, require government approval. The Indian government has also planned to invest up to $1.82 billion for the development of airport infrastructure and aviation navigation services by 2026.
As of March 2019, India had 103 operational airports, this number is expected to increase to 190-200 by FY40. The rising demand expects the number of airplanes to reach 1,100 by 2027 and by 2038 will require 2,380 new commercial airplanes.
Indian Aviation Industry during COVID-19
The aviation industry played a very important role in assisting the government in midst of COVID-19. Under the ‘Lifeline Udan’ scheme operators like Air India, Alliance Air, IAF transported essential medical cargo throughout the country in order to combat COVID-19. 588 flights were operated as of June 20, 2020, under the scheme carrying 940 tonnes of cargo.
The civil aviation industry, unfortunately, was one of the worst-hit in the midst of the crisis. According to the Centre for Asia Pacific Aviation(CAPA) the sector is at a breaking point with domestic traffic declining by over 60% international traffic by 70-80% in FY21.
CAPA also states that 30% of the workforce is estimated to be impacted in the sector. Post the complete lockdown that took place earlier this year air travel was initially subject to only 45% capacity utilization and international flights were suspended till August 31st. Travel that does take place is currently only for essential purposes.
Top Companies in Indian Airline Industry — 2020!
1. Interglobe Aviation (Indigo)
Indigo is the leader in the Indian aviation industry with the current market cap of Rs 49,923.47 Cr. This company trades on Indian stock exchanges with the latest share price of Rs 1,364.95 per share.
Indigo is India’s largest airline by passengers carried and fleet size and boasts a 60.4% domestic market share as of July 2020. The airline was founded by Rahul Bhatia of Interglobe Enterprises and Rakesh Gangwal in 2006 after it took delivery of its first aircraft in July 2006.
The company operates in Indian domestic markets as a low-cost carrier. The company has grown its fleet to 276 aircrafts today and has been one of the few airlines that have been profitable for 10 years.
Spice Jet is India’s 2nd largest airline in terms of domestic passengers carried and has a market share of 13.6% as of July 2020. It has the current market cap of Rs 3,085.41 Cr.
The airline was established as ModiLuft in 1994 with backing from Lufthansa but ceased operations in 1996. In 2004 Indian entrepreneur Ajay Singh acquired the company and renamed it as SpiceJet. SpiceJet started its operations with 2 aircraft on lease and currently has a fleet of over 90 aircraft.
3. Jet Airways
Jet Airways Ltd is an Indian international airline. In March 2019 it was reported that nearly a fourth of Jet Airways’ aircraft was grounded from operations due to unpaid lease rates. It is a smallcap company trading in the Indian stock market with a market cap of Rs 311.82 Cr. The stocks of Jet Airways used to trade at a share price above Rs 1,300 per share in 2005. However, as of Oct 2020, this stock is hovering at a share price of Rs 31.
4. Air India
Air India is India’s flag carrier owned by the Indian government. The airline is India’s largest international carrier with a market share of 18.6%. Domestically the airline falls behind market leaders Indigo and SpiceJet with a market share of 9.1% as of July 2020. The airline was founded in 1932 by JRD Tata and made a profit of Rs 60,000 in its first year carrying weekly mail and 155 passengers.
After WW2 Tata airlines became a public ltd company under the name Air India. Unfortunately, years of loss-making operations have turned the airline into a debt-stricken entity. The government has time and again tried to sell the airline but unsuccessfully. The new owner would have to take on a debt of US$4.7 billion.
The airline operates flights domestically and to its Asian destinations through its subsidiaries Alliance Air and Air India Express. The airline currently has a fleet of 173 aircraft.
5. Air Asia India
Air Asia India was established in 2013 as an Indian airline trough a joint venture between Tata Sons and Air Asia Investment Ltd. ( Malaysia).
The airline also marked the return of the Tata Group into the aviation industry after 60 years. Air Asia holds a 6.2% market share as of July 2020. The airline has a fleet of over 30 aircraft.
Vistara is another airline that includes a Joint Venture between Tata and a global airline. The airline was founded in 2013 as a joint venture with Singapore airlines. Vistara is a name taken from the Sanskrit word meaning “ Limitless expanse”.
Vistara had a market share of 4.2% as of July 2020. The airline has a fleet of 42 aircraft.
GoAir, part of the Wadia Grp. is a lowcost airline. It launched its operations in 2005 and as of July 2005 holds a market share of 3.8%. The airline has a fleet size of 55 aircraft.
The airline had earlier looked for a merger with Spicejet and later appointed JPMorgan to scout for potential investors. In its attempt to raise capital the airline had planned to go for an IPO this year but these plans been delayed.
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The takeoff of the Indian Airline industry has been delayed unfortunately due to COVID-19. Industry experts CAPA expects the Indian aviation industry to shrink to 2-3 players if they do not receive additional funding. This according to them would result in sustainable damage in connectivity throughout India.
Ajay Awtaney, Founder, LiveFromALounge.com said that he expects only IndiGo, Vistara, and Air India will be able to survive post-COVID-19. “IndiGo is cash-rich. They are doing the right thing by raising liquidity and have also taken cost-cutting measures. Vistara too is in a good position right now. They are bleeding financially but have the support of two strong backers. Air India, on the other hand, has the backing of the government”. This calls for added government focus on the industry in order to ensure that the industry does not suffer irreparable damage.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
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