In the airline business, on-time performance isn’t just desirable – it’s imperative. And for a low-cost airline, this is mission critical. That is why last week’s report that IndiGo is battling a wave of flight delays should be a cause for serious concern for India’s largest airline by market share.
Monthly data released by the Directorate General of Civil Aviation shows that IndiGo has been lagging behind major rivals Vistara, AirAsia and Air India for the past six months. This comes after an outstanding performance in 2021 when it was India’s most punctual airline in 10 months out of 12 months. Worse yet, the decline has been particularly sharp over the past six months, from an on-time performance of 95.4 percent in February this year to 84.1 percent in September.
Indigo continues to be the runaway market leader of the Indian skies and the mitigating factors behind the slippage. Chief among them is the congestion at major airports like Delhi and Mumbai where it has maximum connectivity. Unfortunately, that situation is unlikely to change any time soon, meaning the onus is on the airline to improve its performance on this critical parameter.
Data analysis by the researchers showed that there is a direct correlation between timely performance and market share in the airline industry. In a paper titled ‘The Effect of Flight Delays on Passenger Demand and Social Well-being’, Rodrigo Alberto Brito, Martin Dresner and Augusto Volts cite several previous studies stating that “flight delays not only harm air travelers and disrupts their schedules, but also causes reduced efficiency, increased capital costs, reallocation of flight crew and aircraft, and additional crew expenses”.
All of these factors add up to high operating costs, leading fliers to consider the possibility of delays before choosing an airline. Both are equally worrying factors for Indigo. The airline industry’s wafer-thin margins have been severely tested after a double whammy resulting from pandemic lockdowns and the war in Ukraine that pushed up aviation fuel prices. According to IATA data, jet fuel prices in October 2022 were 45.7 per cent higher than a year ago, while daily domestic passenger traffic is now only pushing the pre-Covid numbers. IndiGo’s latest results showed pain: net loss of 1,583 crore in the quarter ended September 30, 2022, marginally lower than the year-ago period, mainly on account of increase in fuel cost and higher foreign exchange deficit.
With the largest fleet of aircraft in the country, IndiGo has been the fastest to recover lost ground. But a quick read of ‘The Art of War’ will tell airline owners that letting a rival get a foot in the door can be dangerous. Leaving the lead on low fares and hassle free service as well as on time performance parameters, IndiGo is doing just that. Until now it had the advantage of the absence of a well-funded competitor with a comparable network. Air India now offers fliers. Cleverly, its new owner, the Tata Group, has focused on punctuality, realizing how important it is for regular fliers, especially corporate executives. As part of its plans to merge with Air India Express and amalgamation of Vistara with Air India by buying the remaining 16.3 per cent stake in AirAsia India from AirAsia Aviation Group Ltd (AAAGL), the Tata group is looking to cover all bases. This group has the potential to match indigo dollar for dollar with the added benefit of resources. This presents a formidable challenge to the market leader.
IndiGo earned its edge in the Indian skies with multi-year profits based on better efficiency parameters than any other airline in the business. It has been low cost in the true sense, reducing its operating cost to the bare minimum. Its reputation for both punctuality as well as a carefully constructed cost structure is threatened by the recent run of delayed flights.
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