‘Looking at business class for A321XLR’

India’s largest airline is going through a transition. By October, there will be almost a brand new C-suite at Indigo. In terms of strategy, the airline is remaking itself to become a choice on long international routes. However, there are many challenges. Strong revenue performance has been masked by high fuel prices. Indigo’s outgoing Chief Executive Officer RONOJOY DUTTA in conversation with Aneesh Phadnis and Arindam Majumder talks about the airline’s thinking and philosophy. Edited excerpts:

You have consistently reported high yields over the past two quarters. Do you think the Indian customer is ready to pay more for a ticket?

The Indian economy is doing well. The number of flyers is only going to grow as it is still underpenetrated.

At Indigo we want to get a disproportionate share of the market through our superior service. But this plan is not without its challenges. The cost is going up and up due to an increase in fuel prices. If we have this revenue number and fuel price is in control, I don’t see yield becoming weaker. It will probably settle at a level and crawl up.

So more airlines coming in will not result in a cut-throat fare war?

I don’t think so. There was a period probably in 2012-13 when revenue growth was very strong.

But airlines still managed to lose money, leading to some companies going belly up.

I am hoping that in this current strong revenue cycle, the industry doesn’t commit the same mistakes. The management at Akasa and Jet Airways are seasoned veterans and I am hopeful that the maturity will sustain.

You said that capacity will increase by 50-60 per cent. Will the airline increase frequency on existing routes or launch new destinations?

The 55 per cent growth was over 2022 which was impacted by Omicron. Compared to pre- Covid levels, our capacity growth will be around 15 percent.

On the domestic front, we have been regularly opening new stations. International is still lagging behind in terms of revenue. Sri Lanka is weak, Malaysia is soft, and China is closed.

In terms of international expansion, now that Delhi Airport has a strong airline in Indigo, what will it take for India to become a transit hub on the lines

of Dubai?

One, there needs to be a good minimum connection time from domestic to international at airports. Internationally, efficient hubs have a connection time of maximum 75 minutes. Here, there are multiple terminals that render connection inefficient.

Two, to get the bank structure aligned. Internationally, the model is that super-connector airlines will have 60 flights coming in within a two-hour period and leaving within the same duration of time. Here we have slots spread throughout the day.

Delhi, Mumbai, Hyderabad, and Bengaluru airports are all looking at it in harmony.

What are the regions for which India can become a transit hub? Association of Southeast Asian

Nations (Asean) to West Asia is the most obvious choice. China to Africa, Asean to Europe are possibilities. All that Dubai does, we can do. Delhi’s geographic position is fantastic.

Have you decided on the product for Airbus 321XLR aircraft?

We are looking very closely at dualclass configuration (business and economy) for the A321 XLR. However, there is no final decision on it yet. We will get them by the tail end of 2024. We will be flying to Europe in a big way as soon as we get these planes. We will go East as well to places like Manila, Seoul, etc.

WE WILL NOT APPEAL AGAINST THE DGCA ORDER (ON THE RANCHI INCIDENT). IT TOLD US WE SHOULD HAVE CONTACTED THE AIRPORT DOCTOR. THE REGULATOR SAID OUR TRAINING NEEDS TO BE SENSITIVE. WE ARE TAKING THE INCIDENT AS A LEARNING OPPORTUNITY AND TREATING IT AS A CASE STUDY”

How do you strike a balance between cost and revenue? Are you hopeful of making a profit this year?

During the Covid-19 waves, our costs were significantly higher. Right now, there is a balance but that is not enough. We need fuel price to go down. On the revenue side, we are doing fine. Profitability will depend on hard-to-predict fuel cost and foreign exchange.

Are you planning further liquidity enhancement measures?

We need to improve our balance sheet. We are still in a negative networth situation. We have a lot of cash but some of it is due to debt. We are not looking at qualified institutional placement or any other liquidity measure.

The Directorate General of Civil Aviation (DGCA) penalised the airline ~5 lakh for denying boarding to a child with special needs. What are your learnings from this?

We will not appeal against the DGCA order. It told us we should have contacted the airport doctor. The regulator said our training needs to be sensitive. We are taking the Ranchi incident as a learning opportunity and treating it as a case study.