Aviation Stocks Continue To Slide On Discounts & Offers

Aviation stocks had barely recovered from poor performance of Q4FY18 when they are being hit by offering of lucrative fares and discounts on domestic and international flight tickets. As it is the off-season given the monsoon, Jet Airways is offering a discount of 20% on base fare on international flight tickets.

Indigo is offering domestic flight tickets at a starting price of Rs1,212. SpiceJet is also offering direct domestic flight tickets at a starting fare of Rs999 under its ‘Mega Monsoon Sale’. AirAsia India is offering domestic flight tickets at a starting price of Rs999 and international flight tickets starting from Rs3,399.

Earlier all the listed aviation stocks – SpiceJet, Jet Airways and Indigo had plummeted due to poor Q4FY18 numbers owing to rise in air turbine fuel (ATF) prices. We are positive on Indigo and SpiceJet for the long term.

Indigo is transforming strategically in order to gain market share (current market share of ~40%) through (1) shifting from pure sale and leaseback models to buying aircrafts, (2) targeting shorter term leases, while the Neo engine issues are resolved, and (3) increasing focus on regional routes (inducting ATRs vs. single aircraft type). Read More

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