Airlines – Take Off Strong in November

Indian airline passenger traffic recorded a strong 29.8% YoY growth during the month of November. This concurs with our view of strong traffic growth for the industry for FY10 and FY11. Despite slightly lower market share MoM, Jet Airways (including subsidiary JetLite) has retained its leadership in terms of market share.

Expect industry-wide yields to improve due to a restricted increase in supply and improving traffic. Yields have already seen an industry wide increase of +20% on the back of fare hikes done by the carriers. Better seat factors should also enable sector to improve margins and return to profitability.

The current softening of crude prices would enable the industry including Jet Airways and SpiceJet to post strong numbers for the month of December.