IndiGo’s landing is getting tougher

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₹1.60 in Q1FY24. Further, the trajectory of other expenses is a factor to track as Cask excluding fuel and forex was higher by nearly 10% year-on-year in Q1. “This cost inflation could remain sticky amid expansion spree by competition," according to Kumar.

In any case, Q2 is a seasonally weak quarter for the Indian aviation sector, which means yield, a measure of pricing, would be subdued during the quarter. In the Q1 earnings call, IndiGo had said it is seeing a larger kind of sequential dip in yields this time around. Now, while IndiGo clocked an all-time high market share of 63.4% in July, its passenger load factor dropped to 83.7% from 90.9% in June.

This fall is higher when compared to some of its peers. This could be a function of fleet additions by IndiGo. The airline has guided for a 25% year-on-year and a 6% sequential growth in capacity in Q2.

Analysts point out that the company is trying to boost its occupancy by offering more discounts. In this backdrop, investors will closely observe how IndiGo’s spreads, a profitability measure, will move going ahead. Spread is the difference between revenue per available seat kilometre and Cask.

There are bright spots, though. For one, rising traction in international travel augurs well for IndiGo’s spread. The airline had noted that cost per unit is comparatively lower for international operations.

“Q1FY24 data for international travel involving India suggests about 900 basis points (bps) swing in market share in favour of domestic carriers. Almost all key international airlines, barring Singapore Airlines, have lost market share," said analysts at Kotak Institutional Equities in a report on 28 August. Here, IndiGo has been the biggest beneficiary, adding 760 bps to gain