IndiGo will exploit international routes as part of its growth strategy

IndiGo, the country’s largest airline, will seek to tap into international routes for passenger and cargo operations as a growth strategy.

International bookings are currently at 25% and are expected to increase over the years as new markets reopen after Covid, IndiGo CEO Pieter Elbers on the post-results call.

Countries in the Middle East and Southeast Asia have opened up (for international travel) and “there is a gradual return of capacity”. However, some markets such as China remain closed.

“In the years to come, we will build our strong Indian foundations with international aspirations,” he said on the call.

IndiGo has a codeshare strategy with American Airlines, Virgin Atlantic, Qatar Airways and Turkish Airlines. On Turkish Airlines, the codeshare also extends to India-Turkey flights. The codeshare agreement will also help connectivity for domestic passengers (people entering India).

Freight operations

In terms of cargo operations, the airline has already placed orders for freighters (cargo planes).

While she received one of these freighters, the second cargo plane will be operational at the end of December. Two more freighters are to be delivered at the “beginning of the next fiscal year” (FY24). These aircraft are operated under lease agreements.

Management stressed that freight operations “will largely focus on the international side”; however, he will not “miss” any national opportunity.

“On our cargo operations, volumes have increased and we remain optimistic. CarGo’s “belly” capacity will be further increased with the introduction of the first Airbus 321 freighter…. This not only gives an additional cost advantage, but also allows us to uniquely serve markets such as China, the Vietnam, the Middle East and some 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.

Activity retake

According to Elbers, a strong recovery is also seen in the Indian market. The Indian market is recovering faster than global markets and the airline is “witnessing robust demand”. IndiGo’s capacity deployment is above pre-Covid levels (at 107%).

Aside from domestic leisure, business travel is experiencing a strong comeback, particularly in MICE (meetings, incentives, congresses and trade fairs). Inbound travel (international travelers coming to India) is seeing “some recovery”.

IndiGo expects that in Q3FY23 (October to December), available seat per kilometer (ASK) – an operating metric for airlines – will increase by around 25% over the time of year former.

Yields (average amount of revenue collected per fare-paying passenger traveled one kilometer) will improve through “holiday season” bookings. Yield improved by 21% YoY to ₹5.07 in Q2FY23 (from ₹4.19 in Q2FY22).

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