Focusing on domestic expansion until resumption of international scheduled flights
At IndiGo, current efforts are on strengthening the balance sheet and return to profitability. While sharing developments at the airline, Sanjay Kumar, Chief Strategy & Revenue Officer, IndiGo, also explains that their primary focus is to keep costs low and grow rapidly in domestic and international markets with a sharp eye on the health and safety of their customers and employees. They also look forward to a decent demand and healthy growth of the aviation industry in 2022.
IndiGo, after resuming operations, has always looked for new opportunities, such as charter flights and cargo business. They were determined to use this opportunity to get better at everything they did. Thus, they set aggressive goals for improving their product delivery, customer service, brand value, employee engagement, cost reduction, liquidity, and revenue generation.
The years 2020 and 2021 have indeed been very challenging for the aviation and travel industry and the global economy, and it is the economy that drives demand for the aviation business. Sanjay says, “We do remain very bullish on the future of Indian aviation - all the underlying elements for rapid growth continue, and I think we have barely scratched the surface in terms of what is possible for the future. Undoubtedly, we are making constant progress. The difficulties of the last years allowed us to explore uncharted territories and emerge stronger with more result-driven strategies in place.”
The aviation industry had seen more changes in the last year than ever before, with the pandemic that completely changed how we work and live. It was critical to explore new avenues of revenue generation. Indigo operated on-demand domestic and international CarGo operations, charter flights, repatriation operations. After witnessing the potential in cargo operations, they launched all CarGo flights as a stand-alone revenue stream. Cargo has indeed been a great contributor towards revenue generation for the aviation sector.
“Additionally, we started 6E Wedding Charter service for our passengers in collaboration with Accor Hotels to offer an exclusive family and friends only IndiGo charter, a hotel deal and safe travel during pandemic times. We also recently tied up with MakeMyTrip, India’s leading online travel company, to launch exclusive charter services between Mumbai and Phuket,” informs Sanjay.
Presently, IndiGo is also wellpositioned geographically to expand into numerous high-growth markets with their single-aisle product. Sanjay shares, “Our four-corner strategy from our four cities of Delhi, Mumbai, Chennai, and Kolkata allows us to serve markets all the way from Moscow to Nairobi to Manila to Beijing, within a range of six hours. We are looking forward to restarting our rapid international growth as soon as the pandemic recedes and international borders open up.”
Omicron is, of course, a major uncertainty for the travel industry. While the impact of Omicron has been modest so far, the airline’s future bookings are experiencing a slowdown, and they cannot predict with certainty when the trend will reverse again. They anticipate that around 20 per cent of their current scheduled operations will be withdrawn from service.
Elaborating on business travel, Sanjay said, “From what we are seeing currently, business travel may take a backseat for some time until the virus subsides to a greater extent. However, we realised that business meetings can still happen virtually. People have stably moved to technology for their business needs, which will hold strong until the pandemic has receded significantly. We are, however, seeing certain segments of the corporate segments getting back to flying in a phased manner. In addition, SME sector, along with other segments such as visiting friends and family, leisure travel has eventually picked up and people will continue to visit their close ones. People are also exploring their own country for leisure purposes and will
continue to do so until international travel restrictions get lifted.”
IndiGo has witnessed good demand in tier-1 and tier-2 cities, driven by SME and VFR traffic. Visiting Friends and Relatives (VFR) and leisure travel will drive business for airlines, emphasising domestic traffic, especially between metros and tier 2/3 cities. The airline enhanced domestic connectivity in the regional stations, including Leh, Agra, Darbhanga, Kurnool, Bareilly, Durgapur, Jabalpur, Gwalior, and Rajkot in 2021. “Observing the current situation, we can very much say that yes, regional routes will remain at the centre stage and will propel the overall growth for some time,” points out Sanjay.
Running a fleet of more than 275 aircraft, IndiGo is currently in the process of replacing its A320ceo aircraft with more fuel-efficient A320neo aircraft. So, the fleet size will remain around 275 until this process is completed by the end of 2022. However, in the absence of the scheduled commercial international flights, they are still expanding their network domestically to cater to consumer demand.