IndiGo bets on overseas flight to expand

“A few years ago, our share of international (in terms of available seat kilometres) was a little over 20%. Within a time span of less than three years, our international percentage last quarter was 28%. As India evolves, internationalization will continue,” chief executive officer Pieter Elbers said in an interview with Mint. “For that matter we had already purchased the Airbus XLR, which should come at the end of 2025; we have purchased the Airbus A350 which would come in in 2027.”

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Before the induction of Aurbus’s A350 widebody aircraft, the airline is currently “investigating” the potential induction of some of widebody aircraft which will be a temporary solution. “By definition it would be a temporary solution, it’s not going to be a hundred percent the exact same Indigo product, but I think we will be able to make it as close as possible to the real IndiGo product,” Elbers said.

By 2030, the airline, operated by InterGlobe Aviation Ltd., plans to double in size and capacity. “Fast forward to 2030, we have aspiration for Indigo to move from a primarily Indian domestic area into a global aviation player. Against that backdrop, the A350 is going to be very important part of it.”

“Indian customers will have a product which will be very much made to their needs,” he said, without giving details. “We will have a cost basis, which will be competitive and effective.”

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India’s aviation sector is expected to grow as demand for travel rises with growing incomes. Driven by festive demand, Indian carriers ferried a record 4.28 crore domestic passengers in October to December, according to data from the Directorate General of Civil Aviation (DGCA).

Consultancy firm EY India sees rapid expansion of India’s aviation market as a big opportunity for Indian airlines to capitalize on the growing demand for both domestic and international travel.

“To fully leverage this potential, it is crucial to devise a comprehensive strategy that not only addresses the challenges posed by well-established global players but also positions Indian carriers as competitive and innovative market leaders.” said Bhavana Yerrumreddy, partner-aviation, EY India

“Key focus areas should include enhancing operational efficiency, investing in modern fleets, strengthening route networks, and offering superior customer experiences,” she said. “By staying attuned to evolving passenger expectations and market dynamics, Indian airlines can secure a significant share of the booming aviation market.”

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IndiGo wants to give passengers an opportunity to fly directly to prominent international destinations. “We will have an opportunity for a lot of consumers to fly direct, so we have the opportunity to fly direct rather than to transfer,” said Elbers.

“Our new international flights are doing extremely well, the Indian consumer wants to fly to Thailand, Langkawi; whatever we do in Central Asia it continues to drive,” he said.

Infra challenge

Indigo’s CEO believes that while the aviation sector in India is growing and demand is evolving, the airport infrastructure should also match up with that pace.

“The challenge is around (if I may call it) the entire ecosystem. We need to have airports which are ready to deal with that growth; we need to have procedures which are efficient for connectivity we need to have processes which are helpful for that,” Elbers said. “Airports need to have both the capacity and equality and, importantly, have cost levels which are a reflection of what people are ready to pay in the market.”

IndiGo reported an 18% year-on-year dip in its December quarter consolidated net profit at ₹2,449 crore versus ₹2,998 crore. The revenue from operations increased 14% to ₹22,111 crore from ₹19,452 crore a year earlier. Depreciation of the Indian rupee against US dollar was one of the reasons for the decline dip in its profits.

“We as an airline cannot control the forex, we just have to deal with it,” Elbers said. “We’ve taken measures in terms of hedging and foreign sales … but we cannot control it.”

Elbers said, “If you look at Q3 excluding forex we had a significant increase of profitability. The growth of 12% in the in the third quarter shows that the growth has yielded a higher profitability level so that’s really an encouragement for us.”

Indigo is sticking to its capacity guidance, citing demand in Q3. “We will deliver on our capacity guidance for this year, it’s going to be in the early double digits, and we are sure we’re going to make it. The first sort of signals from the market is that the strong market which we have seen in Q3, it is continuing in Q4.”

IndiGo carried a record 2.73 crore passengers in Q3. In 2024, it ferried 10 crore passengers, twice as much as of Air India group’s 4.58 crore.

Aircraft on ground

IndiGo is one of the airlines globally facing problems with Pratt & Whitney engines. India earlier had over 70 aircraft that were grounded due to engine issues, and supply-chain problems further delayed the timeline to make the aircraft flight-worthy again. However, the situation has improved with a little over 60 aircraft now affected.

“From what we have communicated last time in Q2, we said we have turned the corner and we see the AOG (aircraft on ground) and numbers going down again. This is beyond our control; supply-chain challenges are there globally, and we have been very effective in actually dealing with it and so far,” said Elbers. “Indigo has done a tremendous job. Otherwise, airlines would have been in a huge trouble if they had 60 planes on the ground.”

The airlines will be significantly better at the start of next financial year, he said, as the airline targets to reduce the number of AOG to less than 50. “Of course, it all depends again on the supply chain challenges and then it will continue to slide down. When will AOG come under single digit, I won’t be able to give any prediction on that.”

Dual-airport system

For the first time in India, the busiest cities of Delhi and Mumbai will have dual airports. The Noida International Airport near the national capital and the Navi Mumbai International Airport near the financial capital are expected to improve India’s aviation landscape. IndiGo being the first airline to sign memorandums of understanding with both the airports is expected to get an early-mover advantage.

“It’s a very important step for India. Major big cities in the world have a twin airport system in place. New airports will be a very much welcomed addition for the country. It will further stimulate travel in India’s domestic and international segment,” he said.

Indigo is very committed to both airports and we will adequately schedule new flights and new opportunities from these airports, he said.

Elbers didn’t not rule out the option of starting new international flights from both new airports.