India’s largest airline, IndiGo, has received the Centre’s approval to renew the wet lease of 11 Airbus A320 aircraft, a move that is expected to bolster its operational capacity and enhance service efficiency, sources told businessline.
The Directorate General of Civil Aviation (DGCA), granted the approval amid increasing passenger demand and the airline’s ongoing efforts to expand its fleet despite the Aircraft on Ground (AOG) issue caused by engine snag.
The renewed wet leases will allow IndiGo to maintain its competitive edge in the fast-growing Indian aviation market, sources said.
What is wet lease?
Last year, DGCA had permitted IndiGo to induct 11 A320 aircraft on wet lease from SmartLynx Airlines. Under wet lease, the aircraft is accompanied by crew and engineers. This is a short-term arrangement to handle supply-side issues.
Presently, the airline has over 20 A320ceo aircraft on damp and secondary lease and six Boeing 737s taken from Qatar Airways.
As of November 4, IndiGo had an operating fleet of 384 aircraft, including 24 A320ceo, 200 A320neo, 112 A321neo, 45 ATR, and three A321 freighters.
Responding to businessline’s query, Abhijit DasGupta, senior vice president, network planning and revenue management at IndiGo, said, “As part of our ongoing strategy to mitigate supply chain challenges and meet our long-term capacity guidance, we are in process of extending leases for some aircraft.”
“This will ensure that we have adequate capacity in place to support the growing demand. We will continue to work with the OEMs and implement measures to minimise the impact of AOGs on our capacity in FY24-25.”
Aircraft crunch
Lately, the airline has faced severe aircraft shortages due to grounding caused primarily by the powder metal issue in the Pratt and Whitney engines that power the A320neo aircraft.
In the second quarter results, IndiGo’s management said that aircraft grounding impacted the airline’s performance. The airline has reported a net loss of ₹987 crore during the quarter under review from a net profit of ₹189 crore in the corresponding quarter of the previous year.
“In a traditionally weaker second quarter, results were further impacted by headwinds related to groundings and fuel costs,” IndiGo’s Chief Executive Pieter Elbers had said.
“We have turned the corner as the number of grounded aircraft and associated costs have started reducing.”
Even though the exact number of grounded aircraft is not known, estimates range above 60 planes.
AOG declining
In a post-earnings analyst call, IndiGo’s Chief Financial Officer, Gaurav Negi, said that the airline’s AOGs have been reducing and should come down to mid-40s by April 2025.
This, he said, would subsequently bring down the spending on AOG mitigation measures. In the second quarter, IndiGo’s operating lease liability stood at ₹47,779.4 crore.
Negi added that as and when the situation of AOG improves, the airline will start returning the damp leased aircraft.