Skift Take
IndiGo reported its first quarterly loss in two years. But coming growth in India’s aviation sector should help it get past that.
Budget carrier IndiGo on Friday reported a loss of INR 9.9 billion ($118 million) in the most recent quarter – a reversal after seven straight profitable reports for India’s largest airline.
In its earnings call on Friday, IndiGo CEO Pieter Elbers blamed rising fuel costs and the grounding of more than 70 aircraft due problems with some Pratt & Whitney engines. He also said demand was starting to slow from high levels last year.
“In addition to these factors, as experienced in the global markets, we have also observed some normalization in the demand in the last few months when compared to the very high base of last year,” Elbers said.
The airline expects to reduce the number of grounded planes to the mid-40s by next April.
IndiGo’s Vision 2030
Elbers has always said the plan for IndiGo was to be a global airline.
By the end of this year, IndiGo is expecting to expand its international network to 40 destinations. “Our capacity share in the international markets has reached 28%. As a result of these additions, our international capacity share is expected to reach the targeted levels of 30%,” he said.
He is also building out the product. IndiGo is expected to soon start its business class offering on its Delhi-Mumbai route. By the end of 2025, it will offer business class on 12 metro routes on 40 aircraft.
It also launched its “Blue Chip” loyalty program.
IndiGo’s Challenges: Infrastructure and Competition
Elbers said that the airline is preparing for “significant further growth,” but noted the work needed to capture that growth.
“Growth is projected to happen at a pace where we also need to keep up with the infrastructure both on the ground and in the air. While a lot of the effort is being made to make sure that infrastructure is being ramped up, infrastructure at a few major hub locations such as Delhi and Mumbai will take time to match this growth,” he said.
This is expected to impact the operational performance of airlines along with their ability to increase capacity at these airports. About 40% of IndiGo’s flights include operations at Delhi and Mumbai airports, and Elbers expects this to impact the airline.
Perhaps that is why IndiGo is the first airline partner for the upcoming Noida International Airport near Delhi.
The airline is also expecting intense competition. “Currently, while some of the markets are still underserved, some markets, especially international, are witnessing added competitive intensity,” the CEO said.
Global airlines are competing with Indian airlines to capture the growing market. Carriers in the Middle East, Singapore, Indonesia, and Malaysia have been seeking grants of more flying rights to operate an increased number of flights to and from India.
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