IndiGo to start regional routes, annual profit falls to ₹1,659 cr
NEW DELHI: InterGlobe Aviation Ltd, which runs India’s largest airline IndiGo, turned in a profit ₹1,659 crore in the year ended March 31 and has decided to buy 50 turboprop planes to start regional operations.
The profit was the airline’s ninth consecutive one, although it was lower than the ₹1,986 crore it posted in 2015-16, mainly due to higher fuel costs.
IndiGo has a 39.9% share of the domestic market by passengers, and flies 133 Airbus A320 planes.
It also has 390 A320neos and 20 A321neos on order, according to Airbus’ order book.
IndiGo told BSE in a statement on Tuesday that it has signed a term sheet with French aircraft maker Avions de Transport Regional GIE for the purchase of 50 ATR 72-600 aircraft. A term sheet becomes a firm order after both sides sign off on the deal.
IndiGo plans to launch its turboprop operation by the end of 2017 and expects to induct up to 20 aircraft by December 2018.
“We are embarking on a journey to build a nation-wide regional network and connect cities that have not benefitted from the growth in India aviation,” IndiGo president Aditya Ghosh said in the statement. IndiGo is likely to be a 177 aircraft airline by March. This number is likely to include 7 ATRs.
ATR said the order was valued at $1.3 billion at list prices. Airlines get deep discounts on list prices which are not disclosed.
Christian Scherer, ATR’s CEO said the new aircraft would help IndiGo “effectively implement its ambitious plans to build a nationwide regional network”.
The choice of a new aircraft is a departure from IndiGo’s longstanding strategy of flying just one aircraft type.
IndiGo’s chief financial officer Rohit Philip said in a call with analysts the complexities associated with multiple fleet types are mostly related to operations including pilot training costs and having a separate pilot pool.
To ensure that these complexities “do not creep into) IndiGo’s operations, the airline will house those aspects unique to each aircraft type (maintenance, flight operations, pilot training) in a separate division.
IndiGo will also bid for the government’s UDAN regional flying scheme that provides subsidy for regional flights.
It will compete with Air India Ltd and SpiceJet Ltd, which have regional operations and have won rights for UDAN flights last month. Jet Airways Ltd also flies ATRs but has not applied to fly under the scheme. Air India, SpiceJet and Jet did not respond to an email seeking comments on how IndiGo’s entry into regional operations would impact them.
IndiGo’s revenue rose to ₹19,369.57 crore for the year ended March 31, from ₹16,655.03 crore the year before. It also announced a dividend of ₹34 per share. In the quarter ended March 31, IndiGo registered a profit of ₹440.30 crore, down 24.6% from ₹583.78 crore the year before.