IndiGo hits 52-week high, shares gain 5% amid market share gain and rising demand in Indian aviation industry
Upstox
2 min read • Updated: March 26, 2024, 1:26 PM
Summary
Strong industry headwinds and consistent market share gains by Indigo has resulted in strong all round financial performance of the company. The company continues to hold dominant market share in the industry at 60%.
Shares of India's largest passenger airline carrier rallied to their 52-week high levels of ₹3,478 on Monday, up by nearly 5.8% at 1:25 PM. The shares of the airline carrier are riding high on optimism of rising demand in the Indian passenger airline industry.
Interglobe Aviation operates India's largest airlines under the IndiGo brand name. The low-cost carrier serves 86 domestic destinations and 32 international destinations. The company holds a 60% market share in India's aviation industry and runs a fleet of 358 aircraft altogether.
Strong Industry headwinds
In recent years, India's airline passenger traffic has witnessed strong demand, primarily due to high disposable income at upper-middle-class levels. In 2023, India's passenger airline traffic grew by 8.4% YoY to 15.2 crore passengers vs 12.3 crore passengers in 2022. Indigo flew more than nine crore passengers in the year 2023 with 60.5% market share as of Q3FY24.
The Civil Aviation Ministry expects India's airline passenger traffic to double by 2030 to 30 crore passengers.The ministry also expects the number of airports to increase to 200 from the current 149 by 2030 as part of the UDAN ( Ude Desh ka Aam Nagrik) scheme, which aims to improve regional connectivity across country.
Strong demand and government support through various schemes bodes well for overall industry growth and, thereby, growth for passenger airline carriers.
Robust market share gains
With its inherent solid industry growth, Indigo is positioned for market share gains, being the largest airline carrier. The company consistently proved to be a dominant player in the industry by tiding some tailwinds of high fuel costs by introducing fuel surcharges, thereby passing the impact of fuel rate hikes on to customers.
Furthermore, the company has consistently expanded its fleet each year. The overall fleet of IndiGo rose from 302 aircraft in December 2022 to 358 in December 2023. In the recent analyst meeting, the company said it plans to add more than one aircraft per week and aims to increase the employee strength to 6,000 by FY25.
In June 2023, Interglobe Aviation inked the largest aircraft order with Airbus for 500 aircrafts worth $55 billion to meet the rising demand and further grow its market share. However, other airline companies like Air India, Akasa Air also continue to improve their operations posing risks to IndiGo’s dominant market share.