Pieter Elbers has steered IndiGo to four consecutive quarters of profit, including the first profitable second quarter in five years. The airline’s on-time performance has improved, it is stitching new partnerships with airlines and designing a loyalty programme. But an issue with powder metal in the geared turbofan engines powering its Airbus A320Neo aircraft threatens to slow the growth of India’s largest airline. IndiGO CEO Pieter Elbers, however, remains confident of overcoming the crisis.
IndiGo’s load factors have been lower than competition? Is this because of the fuel surcharge?
It is too early to come to a full evaluation on the fuel surcharge. There’s obviously a mixture of some very established routes, but we’ve added many more new routes. We have really expanded our network. We do have a lot of Airbus A321 aircraft that have more seats available and, as such, that leads to potentially slightly lower load factor.
How are you mitigating the supply-chain disruption
Our long-term aspiration is to double our size in a decade. None of the recent announcements have made any change in the ambition. We have an aircraft being delivered almost every week. We have taken a lot of mitigating measures; the two wide body planes, which we are operating; the wet leases; and other lease extensions that we’ve done. And all that has really helped us to live up to our capacity guidance. IndiGo is very well-positioned to deal with issues, global supply chain challenges.
Will fares continue to be elevated?
The fuel surcharge was linked to the global rising fuel prices. We cannot predict on that front, given all the geopolitical developments going on. Airfares are also a function of demand and supply. We have seen them fluctuating depending on the demand. Seasonally, it will continue to fluctuate around Diwali and Christmas. They will go down in the lower season, that’s the trend globally.
Any guidance on induction of Airbus A321XLR aircraft?
We maintain our range for the end of FY24 or early FY25. For now, our largest priority is building our base to get one aircraft every week. Post that, we will prepare to build our network on the XLRs. Currently, we have 115 destinations, and we will take it to 118 destinations. So, while we have added routes like Mumbai-Nairobi and Mumbai-Jakarta. I think where the XLR will also help is that that Mumbai Nairobi could be supplemented by Delhi-Nairobi, Mumbai-Jakarta could be supplemented with another route. XLRs will give us a opportunity to build on some of the stations we have opened today, but serve them from different Indian mega cities.
Has the company made any decision on the business class product on XLRs?
The answer still remains that we do not have a decision on it yet
Are you also looking at inducting more pre-owned ATRs for regional routes?
We have added three ATRs in the previous quarter, and we will continue to do so. Hyderabad is our largest base for ATRs but we have been adding ATRs for not only Udaan routes but smaller routes as well. For example, Delhi-Dharamshala. Getting new ATRs into our fleet is a part of that that mitigation plan.
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The Ministry of Consumer Affairs has said airlines are making it difficult for customers to have free seats during Web check-in.
I would prefer to keep discussions between ourselves and the government private. Having said that there is a bit of differentiation between what is the actual practice and what we are communicating (to customers). We continuously monitor and review what is the best way. We are in the process of reviewing and evaluating that. We are sharing it with the government and addressing the questions.
When will IndiGo roll out a loyalty programme?
We have our co-branded cards in place. We are using that foundation to define what the new programme looks like. That is work in progress. I am not going to speculate on the date at present.
There were complaints from a section of passengers about the combination (snacks and drinks) offer on flights? What have you done to address that?
We want to make sure that everyone who wants something to eat or drink has the opportunity to do it. Some of the previous service elements were taking so much time that not everyone on the flight could be served. We have now optimised so that we can serve all passengers on a flight.
What about the order for wide body planes? Are you planning to order more planes?
We keep all options open for the future. We have the world’s largest portfolio of fleet order — 970 planes on order. What is important for us is that aircraft from our initial order (470) will be delivered by the end of the decade and that has made us confident to say that we will double our size by the end of the decade.
Can you share an update on IndiGo’s plans to set up a venture capital fund?
We would like to have opportunity to collaborate with new startups and companies related to aerospace. For that, the creation of a venture capital fund is important. So now we are in the process of setting it up, making sure that we have the right infrastructure in place.
How many planes do you plan to lease from Gift City ?
I won’t be able to specify the number of aircraft [that will be leased from Gift City]. India is becoming one of the aviation powerhouses of the world. I think the government policy of supporting that by having the ecosystem when it comes to airports, infrastructure, financing and Gift City is part of that. It is important for us to diversify the (aircraft) financing and participate in the India growth story.
The DGCA has proposed to reduce pilots’ flight duty time? Will it increase your costs ?
We have started testing fatigue management and making sure that we interact with pilots and how we can address the issues. I think safety culture is best served by having open and transparent discussion with the pilot community and we try to do that in IndiGo. We need to see what is going to be the precise outcome of DGCA discussions. It is good that airlines and DGCA have opened the discussions. In those discussions costs or potential costs don’t play a role.