Whenever people discuss the airline industry the bears cite Buffett’s aversion for airline stocks and the bulls cite the example of Southwest Airlines whose stock has been a phenomenal performer in US for many years. The problem is Indigo or Spicejet is not Southwest Airlines. In India, people are much more value conscious and low cost airline is a undifferentiated business - the lowest ticket price provider wins. Add to it the challenges of fluctuating fuel prices, dominant pilot unions, high airport parking fees at airports and aviation is a difficult business to be in. So, although I travel quite frequently and most often find Indigo completely full, the airline finds it challenging to make consistent profits. And I don’t see it changing anytime soon.
For understanding the aviation industry better, one can go through the following link -