Tough competition for Indigo: InterGlobe AviationThe IndiGo owner may face challenges in gaining market share in the near future due to intense competition. The airline acquired a significant stake in Go First following its bankruptcy in May last year. From April to September 2023, IndigoIts market share increased from 57.5% to 63.4%. However, it fell 160 basis points to 61.8% in November, according to the Directorate General of Civil Aviation.DGCA) data. During this period, spicejetThe share of Tata Group airlines increased from 4.4% to 6.2%, while Tata Group airlines like Vistara, Air India and Air Asia remained relatively stable at 26.5%.
According to ET analysis, historical data shows that airlines gain market share and improve margins during periods of weak competition. This was also true for InterGlobe Aviation, as its operating margin before depreciation and amortization expanded from 20.9% in the March 2023 quarter to 31.2% in the June 2023 quarter. Despite high crude oil prices, factors such as lack of funding, delays in aircraft deliveries and the comparatively weak financial position of competitors played a role in shaping InterGlobe’s performance.
However, the analysis states that the factors cited above are no longer favorable for the airline.

SpiceJet recently met its financial needs by raising Rs 2,250 crore through warrants in December. Akasa Air also addressed a shortage of pilots, and the domestic aviation industry plans to add 150 aircraft over the next year – the most significant increase in four years.
With these changes, analysts predict that InterGlobe Aviation may struggle to grow its market share in the coming months. The airline took action on Thursday to protect its market share by removing fuel charges, which were initially imposed due to high aviation fuel prices. Removal of fuel duty has brought down airline ticket prices.

Airline revenue growth is expected to slow in the next financial year. Bloomberg estimates show InterGlobe’s revenue will grow 10.7% in fiscal 2015, lower than the 21% growth expected in the current fiscal year. Forecasts suggest the airline’s EBITDA margin will decline from an estimated 22.5% in FY2014 to 21% in FY2015.
SpiceJet recently raised funds and resolved its pilot shortage issue, while the domestic aviation sector is set to expand with 150 aircraft in the next 12 months. These factors along with the overall growth in the industry may make it challenging for InterGlobe Aviation to gain incremental market share in the coming months. In response, airlines have taken steps to protect their market share by removing fuel charges, resulting in lower ticket prices.
Analysts estimate that InterGlobe Aviation’s revenue growth will slow in the next fiscal year, with an estimated growth of 10.7% for FY20 compared to an estimated 21% growth for the current fiscal year. The company’s Ebitda margin is also expected to decline from 22.5% in FY24 to 21% in FY25. In terms of valuation, the enterprise value (EV) of InterGlobe Aviation currently stands at 8.9 times its expected Ebitda for FY2025, while it stood at a multiple of 10.1 in FY23.
Read from ET InterGlobe Aviation’s stake unlikely to increase
These factors indicate that InterGlobe Aviation may face challenges in gaining market share and maintaining its financial performance in the medium term.