‘The most important form of resilience is in a strong balance sheet’
Apart from having successfully operated their Passenger Charter and CarGo line of business throughout the pandemic, Indigo Airlines also continuously took measures towards reducing their unit costs further, making their fleet more efficient, ensuring their capacity is right-sized to the market, and experimenting with new network and revenue models. Sanjay Kumar, Chief Strategy & Revenue Officer, Indigo Airlines says that the airlines various initiated cost optimisation measures, work on several revenue opportunities in addition to various measures to maintain the liquidity and finances has helped the airline sustain in these difficult times.
Indigo has been fairly adept as a company in changing from long-term planning to capitalising on quick short-term opportunities. They had to take quick decisions to survive the most unprecedented crisis ever. They converted ten of their passenger aircraft into cargo in-cabin aircraft and have been very successful in CarGo operations over the last 10 months, significantly increasing the revenue from CarGo business. They also rapidly changed their business processes to behave like a charter carrier instead of a scheduled airline and have been very successful with this approach in international as well as domestic markets. All in all, the pandemic has changed the decisionmaking character of IndiGo from a methodical, analytical approach to quick decision making in a crisis mode.
“In addition to the charter operations (Passenger & CarGo), we initiated various other revenue and product enhancements to meet the changed requirement of the travellers. Some of the initiatives are the Flexi Fares which offer flexibility to change, bundled with seat, meal, and reduced cancellation charges. Secondly, our 6E Double Seat options offer customers to choose a next seat empty option, and our Tough Cookie option was launched to offer the COVID warriors (our Doctors and Nurses) a discount of up to 25 percent. We also enabled WhatsApp as a communication channel for the passengers opting for the same,” shares Sanjay.
Domestic demand is picking up fast with people preferring to explore their own country in such times. Sanjay opines, “VFR travel will drive the demand in the long run as well, while we believe that corporate travel may remain tepid for some time as it has majorly been taken over by virtual meetings. Overall, international operations may still be a challenge, but we expect to make a full recovery by the end of this year. As mentioned, domestic recovery has been strong, while international recovery is still facing challenges such as testing, quarantine with fear of virus as well. We expect some boost in the demand once the governments both central and in some states would relax the current restrictions.”
At Indigo, they are consistently working hard to increase capacity, optimise costs and enhance liquidity, and they are also eager to be back on the path of growth. “Going forward, we will continue to operate our Passenger and CarGo charter operations, which helped the aviation industry survive the most unprecedented times. With the commencements of commercial flights effective 25 May 2020, we are seeing a steady growth of the business both in terms of number of flights as well as number of passengers. Currently, we operate above 1200 daily domestic flights, which are close to 80 per cent of the Pre COVID levels. On the international side, we are operating about 25 per cent of the Pre COVID levels through various Bubble flights. We expect with the easing of borders the international flight operations will also see similar growth,” assures Sanjay.
Indigo is well-positioned geographically to expand into numerous high growth markets with their singleaisle product. Their four-corner strategy from the four cities of Delhi, Mumbai, Chennai, and Kolkata allows them to serve markets all the way from Moscow to Nairobi to Manila to Beijing, within a range of six hours.
Speaking of being resilient in these tough times, Sanjay tells, “The most important form of resilience is in a strong balance sheet. Every airline must ensure that they have the ability to survive through the worst of a crisis in order to take advantage of the future recovery which inevitably follows every crisis. The airlines need to work with the various governments to ensure that there is a uniform and consistent response to any future pandemic. This response relates both to the onboard product and the airport processes being followed. Currently, airlines are following a set of processes for their operations and abiding by the set of rules/regulations. Airlines and governments need to work closely in to bring back the confidence of the traveller and the growth of the sector.”