InterGlobe Aviation - Indigo


(mylu) #202

(SMondal15) #203

Industry is facing all time low airfare.Situation has not improved from below snapshot.Surprisingly all airlines now selling ticket between Delhi and Mumbai at below 3K for 15days+ travel. Yield is never going to improve.Is this sector is going telecom way?

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(atul1082) #204

The airlines are earning in 0_14 day slot plus money in cancellation and last minute travel.Imo jet will go down like kingfisher and the not share will be distributed bet indigo and SpiceJet.if crude price comes down , both these appear to b good opportunity to buy.Any views PL?


(Chandragupta) #205

This is old data. As of today, airfares are extremely high. I couldn’t get a Chennai - Mumbai ticket below Rs.10,000 this Monday. I travel regularly on this route and have never seen such a situation. Even international fares have gone up significantly. And with monsoon set to end and festival season about to begin, they will rise further.


(SMondal15) #206

Industry is indeed facing a serious issue of not able to pass the increased cost to passenger.Indigo and SpiceJet and Jet management has already raised the same voice. There is dramatic drop in profit for all Airlines in June quarter.Indigo management has specifically said that one of the reason for less profit is softness of fare in 0 to 15 days.Unless PAX yield is increasing sector will face challenge.


(Shadow_Investor) #207

While the industry is suffering, Indigo adds another 4 aircraft to make to 179.
It is using the opportunity in utilising the huge cash reserve advantage it has over the other airlines and will gain further market share.


(Shyam) #208

Indigo definitely is the best of the lot. However, the current situation is acting a bit against the entire aircraft industry

  • Oil prices are more likely to increase than decrease (forex not helping in this case)
  • The competition in airline industry can sustain a bit longer.

Until there is sign that one of the above eases, I will be watching Indigo closely.


(Shadow_Investor) #209

Abu Dhabi and Kuwait added to Indigo’s international network. This takes indigo to 11 international destinations and 58 overall.

https://m.timesofindia.com/business/india-business/indigo-to-start-flights-to-abu-dhabi-kuwait/amp_articleshow/65530901.cms


(Alok Bhola) #210

(Shadow_Investor) #211

IMHO The Aviation sector is suffering in yields because a single player is actually controlling the prices - Indigo. The Intention of Indigo must be to kill competition by increasing other’s losses . Short term pain for long term gain.
If jet goes out, approx 12% market shall be open to the remaining players. One who is aggressively increasing capacity shall capture the remaining market.
How the Pax growth will be impacted after increasing the prices afterwards is the question remaining to be answered.


(Maunil) #212

One thing i observed from the Spicejet fiasco & shutting down of Kingfisher is that the market share is not very sticky in the airline business and consumer always buys the cheapest available ticket from one of the many aggregators. The same also applies to most of their B2B clients, who use an Corporate aggregator like SITA or other.

The point to think is how long will they be able to make others bleed, because eventually when indigo will hike price, there will be someone (either existing survivor or a new airline) who will lower theirs and the captured market share is gone in a flash.

I like the approach take by the new SJ management, they havent really worked on adding market share but ensured that their PLF’s are above 90%, their prices are normally 10% above indigo. Also i see frequently they are trying to move away from cut throat routes dominated by Indigo to lessen the impact.

My views may be biased. Invested in SJ


#213

Recently I flew IXZ-MAA with 6E. There has been talks of how Indigo does come cost cutting like doing their own seats, cabin crew who are woman to reduce weight, no front row curtain, etc.

The seats plainly sucks and it would be a pain to fly over 90-120 minutes on those seats.

Flimsiest of the padding:
IMG_3101

I generally don’t like LCCs and I wonder why do even people bother with LCCs now that there is hardly any price difference between AI, 9W and UK.
.
Disc: No interest in any airline stocks.


(mylu) #214

(Rajneesh Sharma) #215

(Shadow_Investor) #216

Not only spicejet, even Indigo is trying to tap into cargo space but without any dedicated aircrafts as in case of spicejet

https://m.economictimes.com/industry/transportation/airlines-/-aviation/indigo-spicejet-eye-cargo-business/amp_articleshow/65713461.cms


Sintex (Demerged) - textile business
(Shadow_Investor) #217

Indigo has added Kuala Lumpur as the 12th international destination. Flights to start from 15th Nov.

Further 4 aircrafts have been added making it 186 in total. Currently,

127 (A320CEOs) + 47 (A320NEOs) + 12 (ATR) = 186


(SBT) #218

On the world’s third busiest route - Mumbai- Delhi - you can fly at less than Rs3000/- a couple of days later. And India is that country where ATF is costliest. Is this not putting axe on one’s own foot?


(Shadow_Investor) #219

ATF Prices have increased 7.5% from today onwards. Too many bad news popping out.


(SMondal15) #220

Correct. Probably Indigo wants to elbowout Jet and then enjoy the vacant capacity. Indigo still have 6k crore of cash in book. Hence no fare increase and yield is falling off. But certainly indigo is playing its game as they control 40% capacity in Indian sky.


(phaneendra) #221

Hi All

After 2 years of holding Indigo patiently and see it below my holding price is a test to my conviction and courage of stock market investing.

My Arguments :slight_smile:

  • Indigo will eventually gain the most in the existing market setup but we need to see how market share can lead to profits /margins. I still believe indigo is stock to sell beyond 2022.

  • JetAirways may soon run out of business or acquired by foreign airlines (which may not happen because of the FDI rules which are not clear I believe)

  • Indigo’s next game plan will be to gain market share in overseas flying market with air india, jet airways loosing their market share. Indigo is going to A321 LR which has same narrow body with flying time of around 8 hrs, which will have lowest operating cost I believe.

  • I heard lot of negative stories about indigo’s customer relations and I feel as a company they have to change this culture. Without this culture change, Indigo may not sustain/gain the margins it expects in the longer run.

  • I’m personally obsessed with any company which has the lowest operating cost in the world. I believe this will lead to longevity of the company and the most important factor in airline industry.

  • Airport infrastructure in major metros will not be handle the passenger growth after 2020. Because of this reason bangalore, mumbai, delhi airports are upgraded, so the new capacity addition by airlines will move to non-metro routes. I believe spicejet is having better RASK because of non-metro routes. So Indigo has to play this game of linking non-metros to foreign destinations which will yield better results in the near time.

Concerns :slight_smile:

  1. The capacity addition both by indigo and other players will definitely put pressure on the yields. Capacity addition in the next 5 years will lead to depressed margins in the next 5 years.
  2. New commuting options like hyperloop dramatically decreasing the travel time, I believe this can be a possibility in 12 years, but can’t rule this option early as well.
  3. Bad Customer experience will lead to lower margins.
  4. Any strike by employees/pilots/ground staff can cause problems for short duration.
  5. High fuel prices like 120$ crude for more than 5 years.