Top low-cost carriers (LCCs) increased their domestic market share in May as they benefited from the woes of state-owned Air India, which has been laid low by a long-dragging tiff with its pilots.

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SpiceJet and IndiGo were the top market gainers last month as they ate into the share of their full-service counterparts. With the no-frills carriers planning to add more capacity this year, the trend is likely to continue.

According to the latest figures by Directorate General of Civil Aviation, Air India lost the maximum market share from 17.6% in April to 16.2% in May, while cash-strapped Kingfisher Airlines continued to stay at the bottom with its share dropping to 5.2% last month from 5.4% in April.

While Jet Airways retained its market share at 21.4% in May 2012, its low-cost brand, JetLite, saw a marginal dip of 0.3% to 6.5% market in May.

SpiceJet’s share increased from 17.7% in April to 18.5% in May, while IndiGo’s share improved from 23.8% in April to 24.9% in May. GoAir’s share fell a tad from 7.3% in April to 7.2% in May.

Industry sources attributed LCCs’ market share gain to internal issues inflicting Air India. “The gain for LCCs is mainly due to Air India. Though it is facing HR issues for its international operations, there is sentimental effect in terms of travellers flying the domestic routes,” said Sharan Lillaney, analyst, Angel Broking.

As they add more aircraft, the low-frills segment may continue with their market share gaining spree in the months to come. Both SpiceJet and IndiGo are expected to add significant capacity this year. In the full-cost space, there’s visibility of only Jet Airways inducting four aircraft.

A top official from a global aviation consultancy firm said, “If one looks at the pie chart for the past few months, it looks like LCCs will go ahead and consolidate their position and gain more market share.” “SpiceJet is expected to add three Bombardiers and 3-4 Boeings, while IndiGo may add one aircraft every month. Though, it’s not clear what would be the domestic-international composition of these planes, any incremental capacity in the domestic space would bring more market share to these two players. With Jet Airways adding only four aircraft against this, it is bound to lose share,” said Lillaney.

Air India’s fight back to recovery could change these market dynamics though. In the past, Air India has lashed back with huge discounts to attract customers.

In the long run, with more low-cost capacity coming in, the market shift is expected to continue.