Order to ground Airbus planes may stall Indian low-cost carrier’s expansion plan

New Delhi, India – An order for IndiGo to ground some of its Airbus SE A320neo planes for engine upgrades could impede the expansion of one of the world’s fastest-growing airlines.

For every addition to its fleet, IndiGo must ground an A320neo plane that hasn’t had its Pratt & Whitney engines modified, India's Directorate General of Civil Aviation (DGCA) said following a series of problems on the carrier’s jets, including inflight shutdowns.

The order essentially prevents IndiGo from adding new routes or increasing frequencies until the engine issues are fixed.

IndiGo, the world’s biggest customer for the best-selling Airbus model, may have to adjust its delivery schedule with the plane and engine manufacturers, hurting its ability to consolidate a firm lead over local rivals in market share. Shares of InterGlobe Aviation Ltd, which operates the airline, fell as much as 4.3 per cent Tuesday in Mumbai, the biggest loss in nearly a month.

The DGCA also questioned IndiGo’s ability of meeting a January 31 deadline to fix the engine issue, saying in a statement Monday that the target doesn’t ‘instill enough confidence’. The regulator said its order will remain until all the original Pratt engines have been replaced.

The substitution with new aircraft will help avoid ‘large-scale disruptions’ from grounding the entire unmodified fleet if IndiGo fails to amend all planes on time, the DGCA said, adding that the replacements will fly the same schedules as had been operated by the grounded ones.

The idled planes will be able to operate fresh itineraries once their engines are replaced.

IndiGo, one of few Indian carriers with enough cash to aggressively expand, has been mapping out a way to build a long-haul, low-cost business to take passengers from places like New Delhi to London.

The airline added planes at breakneck pace this year, inducting two new jets a week in May. It has said 45 per cent of engines on its 98 A320neo jets are already modified, meaning it needs to fix about 90 more.

IndiGo in October placed an order for 300 narrow-body jets, including bigger A321neos and the newest XLR model, worth more than US$30bn at last year’s sticker prices. It also operates dozens of ATR turboprop planes on regional routes.