IndiGo Airlines, the country’s largest carrier, is eyeing expansion of international operations as outbound travel picks up. Some of the new destinations that it is eyeing include Nairobi and Jakarta, while opening up of China provides new market opportunities.
The airlines would also strengthen operations across existing international routes, including in the European nations where it has code-sharoing agreements in place.
IndiGo, which reported a near 1,000 per cent increase in profit YoY for Q3FY23 to ₹1,423 crore, “will continue to explore strategic partnerships”, its CEO, Pieter Elbers said during an analyst call.
International markets are recovering and opening-up post Covid and the recovery is being determined by how quickly they have opened up and what measures these markets brought in post-Covid.
The carrier’s deployed capacity stood at 23 per cent (105 per cent of pre-Covid levels).
“We are now fine tuning our growth and network plans going forward. The regions where international expansion (have been done) basically are performing very well,” he said during the call.
The capacity guidance in FY23 was 13-17 per cent while in FY24 is said to be “north of the mid-teens”.
“We have identified a list of destinations such as Nairobi and Jakarta which are on the list to be opened somewhere in the year to come. We have recently seen opening of China as a market. So we are optimistic going forward. And besides our own expansion, part of the expansion we have done – in Europe - are also helping us a lot to get a larger international footprint,” Elbers added.
According to him, growth in international operations will be “higher” than growth in domestic operations; however, domestic operations will continue to be among the dominant contributor going forward.
“Today, the domestic is a vast majority of our operations and it will continue to be case going forward,” he said.
Outlook
Bookings for Q4 are “looking good” combined with “”relatively stable fuel prices”. For the January–March quarter, the airline is expecting to operate at 45 per cent higher capacities.
Switch over to the new ATF pricing mechanism – MOPAG (Mean of Platts Arab Gulf) has helped bring in some savings towards jet fuel prices; however, fuel price continue to be 52 per cent higher in Q4FY23 over the same period last year.
The airline is expecting to be “operationally profitable” in FY23 without the impact of forex.