IndiGo retains star position but profit hit hard

In an indication of competition in the sector impacting severely the margins of domestic airlines, the country’s largest no-frills air carrier, IndiGo, has reported a 60 per cent drop in net profit at Rs 317 crore (Rs 3.17 billion) for the financial year ended March 2014.

This was despite a 17.5 per cent rise in revenue to Rs 11,117 crore (Rs 111.17 billion).

IndiGo had a five-fold increase in net profit to Rs 787 crore (Rs 7.87 billion) in 2012-13, on revenue of Rs 9,458 crore (Rs 94.58 billion).

Experts say the margin was impacted primarily because of currency depreciation, rise in the price of aviation turbine fuel and pressure on account of fare wars in the home market.

IndiGo is unlisted and does not disclose quarterly results.

The figures were available from its filing to the registrar of companies. IndiGo did not respond to an email query, seeking comments on the financials.

This is the sixth year in continuity that it has had a net profit since it broke even in 2008-09.

All other airlines, with the exception of GoAir, reported losses for 2013-14.

The two listed carriers, SpiceJet and Jet Airways, closed FY14 with losses of Rs 1,003 crore (Rs 10.03 billion) and Rs 3,667 crore (Rs 36.67 billion), respectively.

Government-owned Air India continued to bleed, with a Rs 5,388- crore (Rs 53.88 billion) loss.

GoAir is said to have registered a net profit of Rs 50 crore (Rs 500 million), though it hasn't officially confirmed this.

IndiGo’s revenue growth in FY 14 was slower due to price wars in the domestic market.

It had announced a slew of discounts since this January, in response to flash sales by competing carriers, specially SpiceJet.

These impacted the income from operations. From a 65.4 per cent revenue growth in FY13, it reported 17.5 per cent rise in revenue last year.

Average revenue per seat-km fell to Rs 3.7 in FY14 from Rs 3.78 the previous year.

The growth in net profit and revenue was also affected by a slow rise in domestic air traffic, up 4.4 per cent with a little over 60 million passengers in 2013, in comparison to 57 million in 2012.

However, IndiGo was able to scale up its market share, from about 25 per cent in December 2012 to 32.6 per cent in August 2014.

It had a fleet of 77 aircraft as of March 2014, compared to 66 a year before.

In its 2014-15 outlook, the Centre for Asia Pacific Aviation said domestic passenger growth will remain modest and airlines will continue to face pressures.

Image courtesy: Indigo Airlines