IndiGo is now world’s 7th biggest by capacity

IndiGo has emerged as one of the world’s biggest airlines by capacity, aided by a swift recovery in the domestic aviation market to nearly 80 per cent of pre-pandemic levels and the financial strength to boost market share as rivals struggle.

The airline is now the world’s seventh biggest by capacity and the largest outside the United States and China, according to data firm OAG. It is a rare bright spot in a battered global aviation industry, providing a lifeline to squeezed lessors and aircraft manufacturers by paying bills on time and in full.

IndiGo took 44 planes from Airbus SE last year—the most of any customer and topping Delta Air Lines Inc and China Southern Airlines Co Ltd —as it replaced older planes with more fuel-efficient newer models. It is also gearing up to expand its fleet further from 2023.

With a 52 per cent domestic market share in 2020 versus 47 per cent in 2019, and profitability in sight after a loss last fiscal year, IndiGo is expanding its reach to smaller cities such as Ranchi, Patna and Gorakhpur to replace a fall in business travel on larger routes like New Delhi-Mumbai, CEO Ronojoy Dutta told Reuters.

It is also betting that faster growth and higher margins will come from non-stop flights to international destinations like Moscow, Cairo and Manila, which it can reach with its narrowbody planes, eliminating the need to complicate its fleet with widebody aircraft.

“As things stabilise, I’m very optimistic that by the end of 2021, I think we’ll be totally back to normal,”

Dutta said, referring to the calendar year rather than the financial year ending March 31.

“And I think 2022 will be a great year for us in terms of growth and profitability,” he added.

The Covid-19 pandemic brought global air travel to a halt, plunging airlines into the red. India imposed one of the toughest lockdowns and even now airlines can only fly 80 per cent of their capacity on domestic routes.

IndiGo already had free cash of Rs 8,930 crore ($1.22 billion) as of March 31, 2020, a week after India went into lockdown, which it bolstered by raising more than Rs 3,000 crore over the next six months through the sale and leaseback of some assets and other cost-cutting measures.

Once IndiGo can operate at full capacity, it wants to ramp up its utilisation rate to a breakeven level of around 12 hours per day, compared with 10 hours currently, said Dutta, adding it would also be able to fill more seats and reduce unit costs.

—Reuters