IndiGo, the country’s largest airline, will look to tap international routes for passenger and cargo operations as a growth strategy.
International bookings are currently at 25 per cent and is expected to go-up over the years with new markets re-opening post-Covid, Pieter Elbers, CEO, IndiGo, during the post earnings call.
The Middle East and South East Asian countries have opened up (for international travel) and “there’s progressive return of capacities”. Some markets like China, however, continue to remain closed.
“In the coming years we will build our strong Indian foundations with international aspirations,” he said during the call.
IndiGo has a code-share strategy with American Airlines, Virgin Atlantic, Qatar Airways and Turkish Airlines. On Turkish Airlines, the code-share extends to the India–Turkey flights as well. The code sharing agreement will help domestic passenger connectivity (people coming into India) as well.
Cargo operations
In terms of cargo operations, the airline has already placed orders for freighters (cargo planes).
While it has received one of these freighters, the second cargo plane will be operational by December-end. Two more freighters are due to be delivered in the “beginning of next fiscal” (FY24). These aircraft are operated on leases.
The management pointed out that the cargo operations “will largely focus on the international side”; however it will “not miss out” on any domestic opportunity.
“On our cargo operations, volumes have been increasing and we remain optimistic. CarGo “belly” capacity will be further augmented with the introduction of the first Airbus 321 freighter.... This not only gives an added advantage on costs, but also enables us to uniquely service markets like China, Vietnam, Middle East and certain CIS countries,” Elbers said.
As of September 30, IndiGo’s fleet consisted of 279 aircraft - 26 A320 CEOs, 149 A320 NEOs, 68 A321 NEOs, 35 ATRs and one A321 freighter; a net decrease of three passenger aircraft.
Business Recovery
According to Elbers, a strong recovery is being witnessed in the Indian market as well. The Indian market is witnessing a faster recovery over global ones and the airline is “witnessing robust demand”. IndiGo’s capacity deployment is more than pre-Covid levels (at 107 per cent).
Domestic leisure apart, corporate travel is witnessing a come-back, specially in the MICE (meetings, incentives, conferences and exhibitions). Inbound travel (international travellers coming to India) are witnessing “some pick up”.
IndiGo expects in Q3FY23 (Oct – Dec), the available seat per kilometer (ASK) - an operating metric for airlines - will increase by ‘around 25 per cent’ as compared to the year-ago-period.
Yields (average amount of revenue received per paying passenger flown one kilometre) will improve on the back of “holiday season” bookings. Yield improved by 21 per cent, YoY to ₹5.07 in Q2FY23 (from ₹4.19 in Q2FY22).