22 February 2017 India | Aviation Sector Update | Sector Report

Aviation Sector Update

Indigo’s market share and SpiceJet’s PLF best in class
Ashutosh Somani
India’s domestic airlines carried 9.6mn passengers in Jan’17, a 25.7% YoY growth (20%+ ashutosh.somani@jmfl.com Tel: (91 22) 66303083
growth for 13 months in a row), driven by: a) lower ticket prices and b) an improving Nitin Agarwala
economic outlook. The current growth rate places India in an ideal position to achieve nitin.agarwala@jmfl.com Tel: (91 22) 66303125
100mn domestic passenger in FY17. Indigo, a market leader, reported market share (by PAX
carried) at 40% for Jan’17 (+3.8 ppt YoY). SpiceJet continues to outperform the industry
with PLF above 90% over the past 21 months. Increasing capacity (fleet expansion of existing Domestic demand/supply
% O c t - 16 N o v - 16 D e c - 16 J a n- 17
players along with new entrants) is likely to exert pressure on tickets to be sold and keep
A SK (mn) 10.1 10.1 10.2 10.4
price-based competition at play in medium term, while rising fuel price (crude at 56 US$/bbl)
Yo Y (%) 21.6 20.4 21.4 20.6
may put margins to test. SpiceJet’s industry high load factor, cost rationalisation and strong P ax (mn) 8.6 8.9 9.5 9.6
regional presence make it a preferable choice in the space, while Indigo’s market leadership Yo Y (%) 22.7 22.1 23.4 25.7
in the low differentiation space of transportation is more than adequately priced in at CMP,
in our view.
Domestic mkt share by PAX – Jan’16 (%)
 Domestic passenger growth remains 20%+ for the 13th consecutive month: India’s
Others, 7.1
domestic airlines carried 9.6mn passengers in Jan’17 (+25.7% YoY). The demand Go Air, 8.2
remained buoyant due to: a) lower ticket prices led by competition, and b) an improving
economic outlook. Passenger growth has remained above 20% for the 13th consecutive
SpiceJet, Indigo, 39.8
month. Airlines with higher capacities and well distributed flight networks are better 12.8

placed to benefit from the increased demand. Indigo carried 3.8mn passengers, leading
to 39.7% YoY growth in Jan’17 (highest in the industry), while SpiceJet carried 1.2mn
PAX (+21.6% YoY), Jet Airways & Jet Lite carried 1.7mn PAX (+5.6% YoY) and Air India
AirIndia,
carried 1.4mn PAX (+16.6% YoY). 14.1

Jet Airways,
 Capacity addition in-line with demand growth: In Jan’17, domestic ASK increased to 18.0

10.4bn (+20.6% YoY) driven by 28.7% YoY ASK growth of Indigo to 4.3bn. SpiceJet’s
ASK increased 24.8% YoY to 1.2bn. Jet Airways + Jet Lite ASK increased by 3.1% YoY to Domestic PLF (%)
1.8bn and Air India ASK increased 10.1% YoY to 1.5bn. 100

75
 Domestic RPK increased to 9.2bn (+26.3% YoY): Indigo’s RPK increased 36.8% YoY to 50 90 91
87 81 94 82 92 85 85 82 82
3.9bn, while SpiceJet RPK (+26.8% YoY) increased to 1.1bn. Jet Airways + Jet Lite 25
94 91 91 86

(+8.3% YoY) increased to 1.5bn and Air India (+9.8% YoY ) increased to 1.2bn. 0
Jan-17 Dec-16 Jan-16

 Airlines with capacity constraints continue to lose market share: Indigo, a market leader, SpiceJet Go Air Indigo Jet Airways Air India
reported market share (by PAX carried) at 40% (+3.8ppt YoY) in Jan’17. Indigo is ideally
placed to increase its market share further with its plan to induct 20 A320neo aircraft by
the end of FY17. SpiceJet lost marginal share at 12.8% (-0.2ppt YoY). Jet Airways + Jet FY19 target price sensitivity to crude
Lite (market share of 18.0%) and Air India (14.1%) lost market share by 3.0ppt and Crude (US$/bbl) 50 55 60
1.9ppt YoY, respectively, due to their restricted aircraft addition plans. SpiceJet 112 85 58
Indigo 991 840 689
 SpiceJet @93.6% PLF was driven by its ideal fleet mix: In Jan’17, SpiceJet continued to
lead the industry with highest load factor of 93.6% (vs. 92.1% in Jan’16), outpacing the
second-best Go Air (80.8%). SpiceJet’s load factor has remained above 90% in the past
21 months. Indigo’s load factor increased 5.3ppt YoY to 90%, while Jet Airways’ load
factor (+4.3ppt YoY) was at 86.8% and Air India’s load factor (-0.6ppt YoY) was at
81.4%.

 Industry’s operational performance remains top notch: In Jan’17, SpiceJet and Indigo
JM Financial Research is also available on:
performed efficiently on all operational parameters. SpiceJet’s 0.8% flight cancellations,
Bloomberg - JMFR <GO>,
0.6 per 10,000 PAX complaints and 71.6% on-time performance at four metros and Thomson Publisher & Reuters
Indigo’s 0.98% flight cancellation and PAX complaints at 0.3 per 10,000 PAX and 71.2% S&P Capital IQ and FactSet
on-time performance was the best among peers. On-time performance and cancellations
were affected due to fog in northern India. Please see Appendix I at the end of this
report for Important Disclosures and
Disclaimers and Research Analyst
Certification.

JM Financial Institutional Securities Limited

Aviation Sector Update 22 February 2017

Exhibit 1. Domestic Passengers carried (mn) Exhibit 2. Domestic market share by passenger carried (%)
10.0 9.5 9.6 100%
8.9 3.7 3.9 4.6 5.0 5.2 5.1 5.7 5.9 6.4 6.2 6.2 6.1 6.6 7.0 7.1 6.8 6.5 6.6 7.4 7.7 7.7 7.1
8.6 8.5 8.3 8.2 8.6 0.7 0.7 8.8 8.6 8.7 8.4 8.1 8.7 8.4 8.2 8.3 8.1 8.0 8.4 8.6 8.1
7.9 8.4 8.4 8.1 8.4 8.0 8.0 8.2 8.2

16.2 10.8
7.8 7.9 0.6

15.8 11.7
0.6 0.7 0.8 0.8

15.3 12.1

16.6 12.3
16.2 12.3

15.9 12.3
7.7 7.6 7.4

15.5 12.8

21.1 14.6 13.1

16.2 13.3

20.3 13.9 12.8

19.2 13.6 12.6

15.2 13.3
16.7 12.7

19.2 13.9 11.7

18.7 13.6 12.6

19.0 14.5 12.7
18.9 14.2 12.9

18.0 14.1 12.8

17.1 11.9 12.9
19.1 14.6 12.7

17.3 12.0 12.8

17.8 13.1 12.7
0.6 0.5
7.5
7.1 7.0 7.3 0.5 0.5 0.7 0.6 0.7 0.7 0.5 0.7 0.7
75%
6.6 6.6 6.8 6.8 6.7 0.5 0.5 0.5 0.7 1.2 1.2
0.3 0.4 0.4 0.7 0.7 1.1
0.6 0.6 0.6 0.7
1.0 1.1 1.0 1.1 1.1
0.2 0.6 0.3 0.3 0.3 0.3 0.6 0.6 1.0 1.0 1.0 1.2 1.4
0.6 0.8 0.6 0.6 0.5 0.6 1.0 1.0 1.0
0.8 0.8 0.9 1.0 1.2 1.2 1.1 1.1 1.0 1.1
0.7 0.8 0.8

21.1
22.7

20.9
5.0 1.1 1.1 1.2

21.6
20.8
22.4
50%

22.5

21.4
1.3 1.2

20.8
20.4
1.1 1.1 1.2 1.1
1.1 1.0 1.1 1.1 1.1 1.5 1.7 1.7
1.6 1.6 1.6 1.5 1.5
1.6 1.5 1.5
1.5
1.5
1.4 1.5 1.5 1.4 1.5 1.5 1.6 1.6 1.6
2.5 25%

42.7
42.2
40.4
40.2
40.0
39.9

39.8
38.8
38.9

38.7
38.6
38.4

38.1
37.8

37.0
36.8
36.5
35.7

35.8
35.6
35.5
35.3
3.7 3.8 3.8 3.8
3.1 3.3 3.0 3.4 3.3 3.3
2.5 2.8 2.5 2.4 2.4 2.4 2.6 2.6 2.7 2.7 2.8 3.0

0.0 Dec-15
0%

Dec-16
Mar-16
Jun-15

Jun-16
May-15

May-16
Sep-15

Apr-16
Apr-15

Sep-16

Nov-16
Nov-15

Jan-16

Jan-17
Jul-15

Jul-16
Aug-16
Aug-15

Oct-15

Oct-16
Feb-16

Dec-15

Dec-16
Jun-15

Mar-16

Jun-16
May-15

May-16
Apr-15

Sep-16
Sep-15

Apr-16
Nov-15

Jan-16

Jan-17
Nov-16
Jul-15

Oct-15

Jul-16
Aug-16

Oct-16
Aug-15

Feb-16
Indigo Jet Airways AirIndia SpiceJet Go Air Others Indigo Jet Airways AirIndia SpiceJet Go Air Others

Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 3. Domestic passenger growth (YoY) (%) Domestic passenger carried

FY14 FY15 FY16 Oct-16 Nov-16 Dec-16 Jan-17 th
increased 20%+ for 13
Air India 6.9 13.2 14.0 (5.3) (10.1) (3.1) 16.6
consecutive month driven by: a)
Jet Airways (3.1) 5.4 6.9 0.7 1.5 8.1 5.6
lower fares and b) improving
SpiceJet 3.3 (6.6) (0.4) 24.4 17.6 24.0 21.6
economic outlook.
Go Air 19.7 24.3 9.6 15.9 19.3 22.2 27.1
Indigo 15.3 31.2 32.6 42.6 45.2 40.3 39.7
Total Domestic 4.8 15.5 21.9 22.7 22.1 23.4 25.7
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 4. Domestic ASK (mn) Exhibit 5. Domestic market share by ASK (%)
12.0 100% 4.3 4.6 5.6 5.9 6.0 6.0 6.2 6.2 6.8 6.7 6.4 6.5 6.7 7.1 7.1 7.5 7.5 7.4 8.2 8.2 7.7 8.1
10.1 10.1 10.2 10.4 8.7 8.5 8.6 8.2 8.3 8.5 8.4 8.2 8.3 8.0 7.8 8.0 8.2 7.9 7.8 7.7 7.6 7.6
9.5 9.3 9.6 9.5 9.3 7.7 7.7 7.9 7.8
21.0 16.2 10.1
16.6 9.4

20.1 15.8 10.2

19.4 15.0 10.8

19.7 15.3 11.2

18.1 14.510.1
20.2 15.7 11.5

18.8 14.9 10.6

17.8 14.510.3
17.7 14.310.3
20.0 15.5 11.3

18.6 14.7 10.6

20.5 16.3 9.5

19.9 15.8 11.2

20.5 16.3 9.6

20.5 16.1 9.6

0.8 0.8 0.8 0.8

20.3 15.6 9.6

17.0 13.510.4
16.9 13.310.8
17.2 14.1 11.4
17.1 14.2 11.7
17.7 14.5 9.8
9.0 9.0
8.6
9.0 8.3 8.4 8.4
0.7 8.3 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8 75%
7.8 7.6 7.9 8.0 7.9 0.6 0.6 0.8
7.4 0.5 0.5 0.6 0.6 0.7 0.7 0.7 0.7
0.5 0.5 0.5
0.5 0.7 0.7 1.0 1.1 1.2 1.2
0.3
0.4 0.4
0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7
0.6 1.0 1.0 1.0 0.9 0.9 1.0 1.0
0.6 0.9 0.8 1.0 0.9 1.0 1.4 1.3 1.4 1.5
21.2

0.8 0.7 0.8 0.8 0.8 1.4 1.4 1.4 1.4 1.3
6.0 0.7 1.4 1.3 50%
1.3 1.2 1.3 1.3 1.3 1.3 1.3
1.3 1.3 1.2
1.2 1.7 1.7 1.8 1.8
1.7 1.7 1.8 1.7 1.7 1.7 1.6
1.6 1.6 1.6 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.6
3.0 25%

43.3
43.0
42.7
42.8
42.5

42.4

41.6
41.2
41.0
40.8
40.3
39.9

39.9
39.6
39.5

39.5
39.4

39.4

39.4

38.6
38.3
38.0

4.4 4.3 4.3 4.3

3.6 3.7 3.9 4.0 4.1 4.0 4.0
3.0 3.1 3.0 3.1 3.2 3.1 3.3 3.2 3.2 3.3 3.3

0.0 0%
Dec-15

Dec-16
Jun-16
Jun-15

Mar-16
May-15

May-16
Apr-15

Apr-16
Sep-15

Nov-15

Sep-16

Nov-16
Jan-16

Jan-17
Jul-15
Aug-15

Jul-16
Aug-16

Oct-16
Oct-15

Dec-15

Dec-16
Feb-16

Jun-15

Jun-16
Mar-16

May-16
May-15
Apr-15

Apr-16
Sep-15

Sep-16
Nov-15

Nov-16
Jan-16

Jan-17
Jul-15
Aug-15

Aug-16
Oct-15

Jul-16

Oct-16
Feb-16

Indigo Jet Airways Air India SpiceJet Go Air Others Indigo Jet Airways Air India SpiceJet Go Air Others

Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 6. Domestic ASK growth (YoY) (%) 21% growth in domestic capacity
FY14 FY15 FY16 Oct-16 Nov-16 Dec-16 Jan-17 in-line with the demand growth..
Air India 2.9 1.6 3.5 3.9 2.7 8.6 10.1
Jet Airways (2.1) (6.1) 22.2 2.9 1.1 4.9 3.1
SpiceJet 3.1 (19.6) (18.7) 23.0 13.0 23.7 24.8
Go Air 22.0 16.3 2.9 11.3 13.0 16.4 17.5
Indigo 21.2 22.0 22.3 33.7 35.4 32.9 28.7
Total Domestic 6.0 5.1 15.2 21.6 20.4 21.4 20.6
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

JM Financial Institutional Securities Limited Page 2

Aviation Sector Update 22 February 2017

Exhibit 7. Domestic RPK (mn) Exhibit 8. Domestic market share by RPK (%)
10.0 9.1 9.2 100% 3.7 4.2 5.0 5.3 5.3 5.1 5.7 5.8 6.3 6.2 6.1 6.1 6.4 6.8 7.2 7.1 6.8 6.9 7.1 7.6 7.3 7.2
8.5 8.9 8.8 8.7 8.3 8.0 8.6 8.4 8.2 8.2 8.0 8.0 8.3 8.5 8.1 8.1 8.3 7.9 8.2 8.0
8.2 8.0 7.8 8.2 0.7 0.7 7.9 8.1 8.6

20.9 15.6 10.0

19.5 15.1 10.8

20.9 16.2 11.2

19.4 14.5 10.9
20.7 15.8 11.1

19.8 15.2 11.3

19.2 14.7 11.7

19.2 14.4 12.2

19.5 15.4 12.5
7.7

18.5 13.8 11.9

19.5 15.1 12.3
19.1 15.8 11.9

17.6 13.7 11.6

17.5 14.010.7
17.7 14.5 11.5
17.5 14.1 11.8

17.0 13.8 11.7

15.9 12.011.7
17.5 14.7 11.6

16.7 13.012.1
15.9 11.911.8
7.6

16.7 13.1 12.4

7.3 7.3 7.5 7.5 0.6 0.6
0.6 0.7 0.8
7.5 7.0 7.0 0.6 0.5 75%
6.8 6.7 0.5 0.5 0.5 0.5 0.7 0.5 0.7 0.5 0.7 0.7 1.1 1.1
6.2 0.3 6.3 6.4 6.3 6.2 0.6 0.6
0.4
0.4 0.6 0.6 0.6 0.4
0.6
0.6 0.6 0.9 0.6
0.9 0.9 1.0 1.0
0.2 0.6 0.3 0.3 0.3 0.3 0.6 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1.2 1.2
0.6 0.7 0.5 0.5 0.5 0.5 1.0 1.0
0.8 0.9 1.2 1.1 1.1
5.0 0.6 0.7 0.7 0.7 0.7
1.2 1.1 1.0 1.0 1.1 1.1 1.1 50%
1.0 1.0 1.1 1.5 1.5
1.0 0.9 1.0 1.0 0.9 1.5 1.4 1.4 1.3 1.3 1.4
1.4 1.4 1.4 1.4 1.3 1.3
1.3
1.3 1.2 1.3 1.3 1.2 1.3 1.4

45.3
44.8
2.5 25%

42.9
42.5
42.5
42.4

42.0
41.7
41.7
41.4

41.4

41.4
41.0

40.8
40.3

40.1
39.9
38.8

38.8
38.6
38.7
38.4
3.7 3.8 3.9 3.9
3.1 3.1 3.4 3.1 3.4 3.3 3.3
2.5 2.8 2.6 2.5 2.4 2.5 2.7 2.7 2.8 2.8 2.8

0.0 0%
Dec-15

Dec-16

Dec-15

Dec-16
Jun-16

Jun-15

Jun-16
Jun-15

Mar-16

Mar-16
May-15

May-16
May-16

May-15
Apr-15

Apr-16

Apr-15

Apr-16
Sep-15

Sep-15

Sep-16
Nov-15

Sep-16

Nov-16

Nov-15

Nov-16
Jan-16

Jan-17
Jan-16

Jan-17
Jul-15
Aug-15

Jul-16
Aug-16

Jul-15
Aug-15

Aug-16
Oct-15

Oct-16

Oct-15

Jul-16

Oct-16
Feb-16

Feb-16
Indigo Jet Airways Air India SpiceJet GoAir Others Indigo Jet Airways Air India SpiceJet GoAir Others

Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 9. Domestic RPK growth (YoY) (%) RPK increased 26.3% YoY in
FY14 FY15 FY16 Oct-16 Nov-16 Dec-16 Jan-17 Jan’17, driven by c.37% in Indigo’s
Air India 6.6 10.6 6.3 (0.0) (5.8) 1.8 9.8 RPK.
Jet Airways (4.8) 3.9 24.9 1.7 (0.0) 7.9 8.3
SpiceJet 0.0 (8.9) (8.5) 22.8 15.3 25.8 26.8
Go Air 20.6 23.9 8.8 15.6 18.1 22.0 34.8
Indigo 14.7 26.7 29.5 37.7 41.9 37.3 36.8
Total Domestic 4.3 13.3 20.8 22.5 22.2 23.8 26.3
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 10. Domestic passenger load factor (%)

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17

Air India 82.0 80.2 76.0 79.2 85.1 82.5 80.8 78.0 79.0 71.9 75.2 81.5 81.4

Jet Airways 82.5 82.8 78.9 78.4 82.3 78.5 83.4 81.3 79.9 75.5 80.4 86.0 86.8

SpiceJet 92.1 92.3 91.1 93.2 93.5 93.0 92.0 93.2 93.5 91.9 92.5 93.7 93.6

Go Air 84.9 86.4 86.3 87.8 88.6 84.6 90.3 86.0 89.4 84.4 87.3 90.7 90.8

Indigo 84.7 86.0 85.1 85.8 87.2 77.9 83.6 82.1 82.1 84.9 87.9 91.4 90.0
Total Domestic 84.3 84.8 82.8 84.0 86.4 81.0 84.1 82.2 82.5 81.1 84.5 88.7 88.3
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 11. International Passengers carried (mn) Exhibit 12. International market share by PAX carried (%)
2.0 2.0
2.0 100%
1.7 1.7 0.2 0.2 6.1 5.9 5.7 5.7 5.6 6.2 6.1 6.7 7.2 7.2 8.5 8.9 8.6 8.4 8.2 8.0 7.4 7.4 8.4 8.1 7.8 7.7
1.7 1.7 1.6 1.6 1.7 1.6 1.6 1.6 1.7
1.6 1.6
1.5 1.5 1.5 1.5 0.1 0.1 1.5 0.1 0.1
1.5 0.1 0.1 1.4 1.4 0.1 0.1 0.1 0.1 0.1 0.1 0.1
0.1 0.1 0.1 75% 40.4 40.0 39.9 39.9 40.0 40.3 40.7 40.0 38.9 38.8 38.1 37.7 38.6 38.5 38.9 38.8 40.1 38.2 38.2 38.5 39.6 39.4
0.1 0.1 0.1 0.1 0.8 0.8
0.7 0.7 0.7 0.7 0.7
0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6
0.6 0.6 0.6 0.6 0.6 0.6 0.6
1.0
0.2 0.2 50% 9.1 9.2 9.2 9.0 8.4 8.8 8.9 8.7 8.4 8.2 9.0 9.3 8.8 8.7 8.6 8.7 7.9 8.7 9.8 9.8 9.6 9.6
0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
0.1 0.1 0.2 0.1 0.1 0.1 0.2 0.1 0.1 0.2 0.2
0.1 0.3 14.3 14.9 14.3 14.5 14.7 15.1 14.7 13.4 13.4 13.5 13.4 13.7 15.2 15.4 15.2 16.2 16.3 16.8 16.9 15.6 16.2 15.8
0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3
0.5 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2
25%
0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 30.1 30.0 30.8 30.9 31.3 29.6 29.5 31.2 32.0 32.2 31.0 30.4 28.8 29.0 29.1 28.3 28.4 27.9 27.8 28.0 26.9 27.5
0.0
0%
Dec-15

Dec-16
Jun-15

Jun-16
Mar-16

May-16
May-15
Apr-15

Apr-16
Sep-15

Sep-16

Nov-16
Nov-15

Jan-16

Jan-17
Jul-15
Aug-15

Oct-15

Aug-16
Jul-16

Oct-16
Feb-16

Feb-16
Mar-16
Jun-15

Jan-16

Jun-16

Jan-17
Jul-15

Jul-16
Nov-15
Dec-15

Nov-16
Apr-16
Apr-15
May-15

Oct-15

Oct-16

Dec-16
May-16
Aug-15
Sep-15

Sep-16
Aug-16

Air India Air India Express Indigo Jet Airways SpiceJet Air India Air India Express Indigo Jet Airways SpiceJet

Source: Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite
Source: Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

JM Financial Institutional Securities Limited Page 3

Aviation Sector Update 22 February 2017
Exhibit 13. International passenger carried growth (YoY) (%) International passenger carried
FY14 FY15 FY16 Oct-16 Nov-16 Dec-16 Jan-17 increased c.18% YoY in Jan’17 to
Air India 12.2 9.6 3.6 7.3 0.3 (2.5) 0.6 2.0mn.
Air India Express 19.0 3.4 10.1 30.8 29.6 39.9 37.9
Indigo 24.0 (2.5) 13.6 24.7 26.1 31.9 37.9
Jet Airways 5.6 20.6 5.8 6.9 7.5 18.3 19.7
SpiceJet 97.5 (13.5) 26.4 55.7 34.9 24.3 24.7
Total International 14.8 9.9 7.5 13.8 11.7 16.1 17.8
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 14. International ASK (mn) Exhibit 15. International market share by ASK (%)
10.0 100% 3.1 3.0 2.9 2.9 3.0 3.0 3.0 3.3 3.8 3.9 4.2 4.6 4.6 4.5 4.4 4.3 4.1 4.3 4.3 4.2 4.0 4.0
8.2 8.2
7.6 7.5 7.4 7.7 7.6 0.3 0.3

37.6

36.9
37.7
37.5

37.6
37.6

37.7
38.0

36.7
36.5

35.5
35.8
36.1

36.5
35.5
35.7

36.8
35.6

36.6
36.5
37.0
36.6
6.9 6.8 6.6 6.8 6.7 7.0 7.1 7.1 7.0 7.3 7.3 0.3
7.5 6.5 6.8 6.7 6.7
0.3 0.3 0.3 0.3
0.3 0.3 0.3 0.3 75%
0.2 0.2 0.2 0.2 0.2 0.3 0.3
0.2 0.2 0.2 0.3 3.0 3.0
2.7 2.8 2.7 2.8 2.8
2.6 2.6 2.4 2.5 2.5 2.6 2.6 5.5 5.4 5.4 5.4 5.4 5.5 5.5 5.4 5.0 5.2 5.5 5.6 5.4 5.4 5.4 5.6 5.3 5.6 6.2 6.1 6.0 6.2
2.5 2.6 2.5 2.6 2.6 2.5 2.5 2.5

10.2
10.2
10.3
10.3
10.3
10.9
11.4
10.7
10.8

10.8

10.8

12.6
10.9
11.0

10.6

12.6
12.4
12.8

13.2
5.0 50%

12.9

13.0
13.0
0.5 0.5 0.5 0.5
0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 1.1 1.1
0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.8 0.9 0.9 0.9 1.0 1.0 1.0

44.2

44.2
44.3

44.0
44.0
2.5 25%

43.4

43.5
43.3

43.2
43.1
43.2
43.0

42.9
42.9

42.2
41.8
41.3
40.7

40.2
40.2
40.1
40.0
2.8 3.0 2.9 3.0 3.0 2.8 2.9 3.0 3.1 3.1 2.9 3.1 3.1 3.1 3.1 3.2 3.1 3.0 3.1 3.1 3.3 3.3

0.0 0%
Dec-15

Dec-16

Dec-15

Dec-16
Jun-16

Jun-15

Jun-16
Jun-15

Mar-16

Mar-16
May-15

May-16
May-16

May-15
Apr-15

Apr-16

Apr-15

Apr-16
Sep-15

Sep-15

Sep-16
Nov-15

Sep-16

Nov-16

Nov-15

Nov-16
Jan-16

Jan-17
Jan-16

Jan-17
Jul-15
Aug-15

Jul-16
Aug-16

Oct-16

Jul-15
Aug-15

Aug-16
Jul-16

Oct-16
Oct-15

Oct-15
Feb-16

Feb-16
Air India Air India Express Indigo Jet Airways SpiceJet Air India Air India Express Indigo Jet Airways SpiceJet

Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 16. International ASK growth (YoY) (%) International ASK increased c16%
FY14 FY15 FY16 Oct-16 Nov-16 Dec-16 Jan-17 YoY in Jan’17 to 8.2bn.
Air India 17.6 10.0 6.1 5.8 3.5 6.2 4.9
Air India Express 16.3 3.6 7.9 37.4 43.3 51.3 46.5
Indigo 13.3 (7.1) 12.8 28.8 28.8 39.4 36.6
Jet Airways 1.7 15.5 6.0 10.9 13.0 16.1 16.6
SpiceJet 178.3 (30.6) 33.7 62.1 45.9 25.1 21.5
Total International 13.6 8.5 7.3 14.1 13.8 16.8 15.8
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 17. International RPK (mn) Exhibit 18. International market share by RPK (%)
8.0 100% 3.1 3.1 3.0 3.1 3.0 3.3 3.3 3.8 4.1 4.0 4.7 5.2 5.2 5.1 4.7 4.7 5.2 4.9 4.9 4.7 4.5 4.4
6.7 6.9
6.0 6.0 5.0 0.3
5.9 5.8 0.3
39.4
39.3
39.5
39.7

38.2
38.2

37.7
37.2

37.4
40.5

37.6

37.3
39.7
40.6

46.1
37.8

37.4
37.0

38.2
40.8

37.6
37.5

6.0 5.5 5.4

5.6
0.2 5.3
5.7 5.5 5.7 5.6 0.3 0.3 5.6 5.6 75%
5.1 0.2 5.3 0.2 5.0 4.9 5.2 0.2
0.3 0.3 0.3
0.2 0.2 0.2 0.2
0.3 0.3 0.3 0.3 2.5 2.6
0.2 0.2 0.2
2.3 2.3 2.2 2.3
2.2 2.1 2.1 2.2 2.1 2.1 2.1 2.1 2.1 2.1 2.2 6.1 6.0 5.8 5.6 5.3 5.7 5.7 5.5 5.3 5.2 5.6 5.9 5.8 5.7 5.4 5.7 6.1 5.7 6.4 6.4 6.4 6.4
10.2
10.3

4.0 2.0 50%

10.2
10.7
11.3
10.9

2.1
12.0
12.4
11.0

14.7
10.5

11.9
11.9

13.0
12.1

12.0
2.1
11.9

12.2

12.5
11.6

11.8
11.5

2.0 2.0 0.4 0.4

0.3 0.3 0.3 0.3
0.3 0.3 0.3 0.3 0.3 0.3 0.7 0.7 0.3 0.4 0.4 0.8 0.8
0.3 0.7 0.3 0.3 0.3 0.6 0.6 0.3
0.6 0.6 0.6 0.6 0.3 0.3
0.6 0.6 0.5 0.5 0.6 0.7 0.7 0.7 0.7 0.7 0.7
2.0 25%
42.4
42.1

41.7
41.3
41.0
40.9
40.7

40.6

40.4
40.1
47.7

39.7
39.7
39.5

39.4
39.3

39.1
39.1
38.7

38.7
38.6

38.5

2.5 2.6 2.2 2.3 2.2 2.2 2.2 2.4 2.4 2.2 2.2 2.3 2.6 2.7
2.0 2.2 2.2 2.2 2.3 1.9 1.9 2.1
0.0 0%
Dec-15

Dec-16

Dec-15

Dec-16
Jun-15

Jun-16
Jun-15

Jun-16
Mar-16

Mar-16
May-16

May-16
May-15

May-15
Apr-15

Apr-16

Apr-15

Apr-16
Sep-15

Sep-16

Sep-15

Sep-16
Nov-16

Nov-15

Nov-16
Nov-15

Jan-16

Jan-16

Jan-17
Jan-17
Jul-15
Aug-15

Oct-15

Aug-16

Aug-15

Aug-16
Jul-16

Oct-16

Jul-15

Oct-15

Jul-16

Oct-16
Feb-16

Feb-16

Air India Air India Express Indigo Jet Airways SpiceJet Air India Air India Express Indigo Jet Airways SpiceJet

Source: Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite Source: Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

JM Financial Institutional Securities Limited Page 4

Aviation Sector Update 22 February 2017
Exhibit 19. International RPK growth (YoY) (%) International RPK increased 14.2%
FY14 FY15 FY16 Oct-16 Nov-16 Dec-16 Jan-17 YoY in Jan’17 to 6.9bn..
Air India 17.5 6.9 7.8 15.0 9.1 3.5 6.0
Jet Airways 20.9 6.9 9.0 20.2 26.3 36.9 34.3
SpiceJet 11.4 (6.2) 13.4 27.0 29.1 36.0 41.9
Go Air 1.7 18.4 5.3 4.2 5.2 13.1 12.8
Indigo 157.1 (24.7) 44.6 68.4 38.6 24.8 25.9
Total Domestic 13.3 9.1 8.3 13.6 11.6 13.2 14.2
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 20.
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17
Air India 81.1 75.0 74.6 71.1 71.5 73.4 76.6 77.7 72.9 71.0 75.2 77.8 82.0
Air India Express 84.4 78.7 82.0 84.6 82.9 72.9 78.8 80.0 76.9 68.3 70.1 76.6 77.4
Indigo 83.5 81.1 84.8 82.5 82.3 77.1 80.8 76.7 76.9 75.2 79.7 86.3 86.8
Jet Airways 88.5 82.8 82.3 81.8 82.8 81.1 83.1 83.7 77.5 74.4 77.9 85.1 85.6
SpiceJet 88.4 88.0 89.2 88.1 87.3 83.3 87.0 85.9 86.2 83.3 84.1 90.7 91.6
Total International 84.6 79.1 79.4 77.8 78.1 76.7 79.9 4.1 4.3 4.7 4.9 5.2 5.3
Source: DGCA, JM Financial; Note: Jet airways includes Jet Lite

Exhibit 21. SpiceJet – Target price sensitivity to crude and Rs/$

Avg. price of Brent crude (US$ per barrel)
45 50 55 60 65
63 161 136 111 85 60
Avg. Rs/US$

65 150 124 98 72 46
67 139 112 85 58 31
69 128 100 72 45 17
71 117 88 60 31 3
Source: JM Financial

Exhibit 22. Indigo – Target price sensitivity to crude and Rs/$

Avg. price of Brent crude (US$ per barrel)
45 50 55 60 65
63 1,295 1,153 1,011 869 727
Avg. Rs/US$

65 1,218 1,072 925 779 633

67 1,141 991 840 689 538
69 1,065 909 754 599 443
71 988 828 668 508 349
Source: JM Financial

JM Financial Institutional Securities Limited Page 5

Aviation Sector Update 22 February 2017
Exhibit 23. Comparative valuation
EBITDAR EPS CAGR Net
Companies EV/ EBITDAR P/E ROE ROCE
CAGR FY16- Debt/EBITDA
FY16- FY18E
FY17E FY18E FY18E FY17E FY17E FY18E FY17E FY18E FY17E FY18E
FY18E
LOW COST CARRIER
Asia Pacific
Air Asia Bhd 6.7 7.2 (1.4) 5.2 6.7 42.3 29.4 16.9 3.3 3.5
North America
JetBlue 4.8 4.4 (6.6) 11.1 10.0 - 14.6 14.2 13.2 13.2 0.7 0.6
Southwest 6.9 6.2 1.7 14.8 12.3 - 25.6 25.7 17.0 17.0 (0.3) (0.5)
Spirit Airlines 6.3 5.6 7.9 12.8 11.2 10.5 18.0 17.3 17.1 17.1 2.1 1.9
Eurasia & ME
Ryanair 8.7 7.9 8.3 13.4 11.8 1.6 32.9 29.8 16.3 16.3 0.0 (0.2)
EasyJet 6.3 5.7 (1.6) 12.3 10.6 (8.7) 11.0 12.0 15.9 15.9 (0.0) 0.7
Norwegian 8.6 7.1 11.6 14.6 10.3 (12.9) 13.7 17.1 11.0 10.4
India
Spice Jet 6.6 6.2 21.9 6.5 6.0 18.6 NA NA 66.4 56.4 0.8 0.1
Indigo 9.3 7.3 18.0 17.8 11.4 16.0 63.5 66.5 23.0 33.5 (0.2) (0.2)
Average 6.9 6.3 12.0 10.4
FULL SERVICE CARRIER
Singapore Airlines 5.1 5.2 1.7 22.2 21.5 (18.5) 4.5 3.9 5.5 5.5 (0.9) (0.3)
Cathay Pacific 7.8 7.8 (5.8) 58.2 180.3 (79.8) 1.8 0.9 6.5 6.5 4.7 5.9
Turkish Airlines 10.1 7.7 10.2 (11.0) 12.9 (54.7) (7.2) 5.2 12.6 6.8
Qantas Airways 3.6 3.6 0.8 6.5 6.5 4.1 26.8 23.1 15.1 15.1 0.8 0.7
Lufthansa 2.1 3.0 (0.4) 4.7 7.0 (27.5) 23.8 14.2 13.0 13.0 0.8 0.9
EVA Air - - - 10.5 11.2 (6.3) 12.0 11.6 6.0 6.0 2.3 2.4
Asiana Airlines - - - 12.6 10.5 - 6.9 7.5 7.7 7.7 5.7 5.5
Jet Airways 7.7 7.8 10.3 9.1 8.1 (33.4) (9.8) (11.4) 4.4 7.5
Average 6.1 5.9 14.1 32.2
Source: Bloomberg, JM Financial; Note: Low Cost Carrier average does not include SpiceJet and Indigo, Valuations as of 22/02/2017

JM Financial Institutional Securities Limited Page 6

Aviation Sector Update 22 February 2017

APPENDIX I

JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U65192MH1995PLC092522
Member of BSE Ltd. and National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: BSE - INZ010012532, NSE - INZ230012536 and MSEI - INZ260012539, Research Analyst – INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: sunny.shah@jmfl.com

Definition of ratings
Rating Meaning
Buy Total expected returns of more than 15%. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%

Research Analyst(s) Certification

The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:

All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and

No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.

Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst, Merchant Banker and a Stock
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material disciplinary action has been taken by SEBI against JM Financial Institutional Securities in the past two financial years which may impact the investment
decision making of the investor.
JM Financial Institutional Securities provides a wide range of investment banking services to a diversified client base of corporates in the domestic and
international markets. It also renders stock broking services primarily to institutional investors and provides the research services to its institutional
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JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy or
sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
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Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
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The Research Analyst(s) principally responsible for the preparation of this research report and members of their household are prohibited from buying or selling
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The Research Analyst(s) principally responsible for the preparation of this research report or their relatives (as defined under SEBI (Research Analysts)
Regulations, 2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the
company(ies) covered under this report, or from any third party, in connection with this report or (c) do not have any other material conflict of interest at the
time of publication of this report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies) covered under this report.
While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional Securities
may not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
This report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision. The
investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire risk of
any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves the right
to make modifications and alterations to this statement as they may deem fit from time to time.

JM Financial Institutional Securities Limited Page 7

Aviation Sector Update 22 February 2017

This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any
transaction.
This report is not directed or intended for distribution to, or use by any person or entity who is a citizen or resident of or located in any locality, state, country
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themselves of and to observe such restrictions.
Persons who receive this report from JM Financial Singapore Pte Ltd may contact Mr. Ruchir Jhunjhunwala (ruchir.jhunjhunwala@jmfl.com) on +65 6422 1888
in respect of any matters arising from, or in connection with, this report.

Additional disclosure only for U.S. persons: JM Financial Institutional Securities has entered into an agreement with JM Financial Securities, Inc. ("JM Financial
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This research report is a product of JM Financial Institutional Securities, which is the employer of the research analyst(s) solely responsible for its content. The
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JM Financial Institutional Securities only accepts orders from major U.S. institutional investors. Pursuant to its agreement with JM Financial Institutional
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this research report or the information contained herein.

JM Financial Institutional Securities Limited Page 8