As the world comes out of a lockdown and vaccination gathers pace, IndiGo is well poised to capitalise on the eventual resumption of air services. The airline will have two things in its arsenal: the A320neo family, which can be deployed on shorter international routes such as Singapore and Kuala Lumpur, and a fleet of A321neos that can fly much longer distances.
Indi Go, India’s largest carrier by fleet and domestic market share, has the unique distinction of not having closed a station ever in its history of over 14 years. That’s a feat unmatched by anybody in the past in this country. Thus it came as a surprise when it suspended Delhi-Singapore, one of its first foreign routes when it went international in September 2011, as well as Mumbai–Singapore. The airline did not suspend the station, but instead chose to connect it from Chennai.
While one of the reasons for suspension was domination on the route by Singapore Airlines and Jet Airways, which offered a better product, there also were operational challenges. The A320s that the airline operated did not have the legs to operate non-stop with a full load. In a market that is often described as a shoppers’ paradise and where people are known to check in extra luggage, this became a problem for the airline.
This was before the airline inducted its first A320neo aircraft. The aircraft, with its 15 percent savings would give the airline that additional range or help it carry additional luggage as it has to carry less fuel. The first of the A320neos landed in March 2016. Indi Go has paid special focus to fleet planning. In 2011, the airline placed an order for 180 A320 aircraft comprising 30 A320ceo and 150 A320neo. By 2014, when the airline received the 100th aircraft from its initial order, it had already placed another order for 250 A320neo aircraft. Having converted the 30 A320ceos to A320neos, the airline was hoping to get delivery of the aircraft to replace the older A320ceo and have a rapid induction into the fleet.
In November 2018, Indi Go decided to take its domestic battle with AirAsia India to Air Asia’s global hub, Kuala Lumpur. But the repeated engine issues with Pratt & Whitney engines meant that the airline was not certified to fly ETOPS (longer period from nearest diversion airport). While Air Asia could deploy its A320neo (powered by CFM) to Bengaluru, Indi Go couldn’t. At a route level, going head to head, that meant additional costs for Indi Go. The A320ceo also did not have the legs to operate to Kuala Lumpur with full loads in all seasons.
In October 2019, Indi Go placed another mammoth order. The 300 aircraft order comprised A320neo, A321neo and A321XLR. While the split of A321neo, A321LR or A321XLR is not known. The airline has 332 A320neos on order and 398 A321neos on order.
As the world headed into a lockdown, Indi Go, with a cash reserve unmatched by any other Indian airline, decided to start retiring its A320ceo aircraft at the earliest. This, the airline said, was to ensure that it had a fleet of super-efficient ‘NEO’ aircraft, going forward.
In successive analyst calls, Rono Dutta, the airline’s Chief Executive Officer, has been very open about Indi Go’s intentions for its international and cargo operations. He has time and again talked about how international had been giving exceptional results and also how the cargo business has grown by leaps and bounds.
What changes now?
As the world comes out of a lockdown and vaccination gathers pace, it is a matter of time before things start getting back to normal. And when they do, IndiGo would be in a far better position than competition not just in the domestic market but also in the international market.
While a domestic recovery is in progress, what happens on international routes is anybody’s guess. Over a year into the lockdown, India and most other countries have suspended scheduled international services and operated only select routes with capacity constraints. Most countries in the region have stopped issuing tourist visas and passengers as such are not welcome.
When international services resume, IndiGo will have two things in its arsenal — the ETOPS certified A320neo family, which can be deployed on routes such as Singapore and Kuala Lumpur, and a fleet of A321neos that have a longer range than the A320neo.
What will differentiate the airline is its bank balance as compared to its regional peers. Singapore Airlines group has relied on a bailout from the local government and AirAsia is struggling all across, which also led it to sell its stake in the Indian subsidiary. AirAsia’s long-haul arm AirAsia X is on the verge of collapse. AirAsia X operates flights to Delhi from Kuala Lumpur.
Traditionally, Bangkok, Kuala Lumpur and Singapore have acted as a mix of tourist traffic and transit traffic and the perceived preference to fly non-stop could mean traffic to Australia or the US could be snatched away by Air India and/or American carriers, respectively, and transit traffic to the likes of Vietnam could see IndiGo gain the most as it had launched flights in the market before the lockdown.
With bailout money, airlines may not be in a position to offer cutthroat fares, which IndiGo can, and which will help the airline snatch market share like never before. The only challenge in this hunky dory picture is the airline’s slimline seats and lack of any entertainment or charging ports. As flights become longer, the lack of comfortable seating and ability to charge personal devices could be the game changer.
Source: moneycontrol
