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Grounding of 737s may help IndiGo regain market share

Indigo has single fleet operation of Airbus and hence, is insulated from the issue.

, ET Bureau|
Updated: Mar 14, 2019, 08.57 AM IST
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Indigo accounts for 31.7 per cent of the total sector fleet capacity.
ET Intelligence Group: The Directorate General of Civil Aviation's (DGCA) decision to ground Boeing 737 Max planes over safety concerns will benefit Indigo, the dominant airline by market share and will hurt SpiceJet the most.

SpiceJet has grounded 13 Boeing 737 Max, which is 17.3 per cent of its total capacity of 75 aircraft. Jet Airways has grounded five Boeing 737 Max, which is 4 per cent of total capacity of 123 aircraft. Additionally, Jet has grounded 50 aircraft due to non-payment to lessors. It means Jet’s 44.7 per cent capacity is grounded.

Indigo has single fleet operation of Airbus and hence, is insulated from the issue. It may help the airline regain the market share. Its share had fallen by nearly 100 basis points to 42.5 per cent in January while SpiceJet’s share increased by a similar percentage points to 13.3 per cent.
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Indigo accounts for 31.7 per cent of the total sector fleet capacity, which may help the company take advantage of the current situation.

In the March 2019 quarter, Indigo is expected to add 34 per cent of tje sector’s capacity. During the analyst call after the December 2018 quarter results, Indigo’s management said that in 2019, its capacity would grow by 25 per cent while the sector’s capacity would grow by 19 per cent.

Notwithstanding these positive factors, Indigo has its own share of issues which includes shortage of pilots and malfunctioning of aircraft engines. The stock’s long term movement will depend upon how well the company addresses these concerns. On Wednesday, InterGlobe Aviation's stock gained 3.7 per cent over the previous day's close, while that of SpiceJet and Jet Airways lost 2.5 per cent and 4.4 per cent respectively.

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