Increase in price of 11 routes may boost profits of SpiceJet, IndiGo in Q1
IndiGo and SpiceJet have been estimated to have increased fares on 11 routes which will prove profitable for the airlines in the first quarter which will come to a close in another 4 days.
Key highlights
- Increase in flight fares, decline in ATF prices and rupee appreciation to help boost profits of domestic airlines.
- SpiceJet and IndiGo increased prices of flight tickets from March to June period.
- Airlines will further exercise pricing power on slower domestic capacity addition and peak load factor.
Increasing fares on just 11 domestic routes in India may have been enough for airlines like IndiGo and SpiceJet to post a more profitable first quarter of current fiscal year.
The first quarter of this financial year FY18 will end on June 30, which is just four days away and companies will start posting revenue and financial results after that.
“Our one-month forward fare tracker for 11 routes shows an upward trend in fares over a seasonally strong 1Q. We believe yields for airlines (IndiGo and SpiceJet) would improve QoQ in 1QFY18,” Motilal Oswal analysts - Swarnendu Bhushan and Abhinil Dahiwale said on June 21.
However, after a disappointing first quarter, SpiceJet and IndiGo had increased prices of flight tickets.
If you’re wondering what happened to all those summer sales by airlines that you read about, well they still applied on select routes. And if you read the fine print the charges were most likely base fares barring fuel and surcharges.
Also Read: How a three day flight ticket sale by Jet Airways, Spicejet, IndiGo help
Flight tickets have shown an uptick in prices from the period March to June on 11 routes, the report added.
Airliners last quarter results show that your flight ticket prices may rise
IndiGo and SpiceJet have recorded highest revenue earned from select routes in India on travel to places like Delhi, Dehradhun, Bengaluru and Mumbai from March to May this year, DGCA report on May 19 said.
In the month of May IndiGo had earned the highest percentage of revenue from Delhi to Dehradhun that comprised 7.68% of its revenue earned.
In March and April the company had earned its highest share of revenue on travel between Bengaluru and Mumbai.
Goods and service tax to have minimal impact on flight tickets
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