While Covid was the worst period for airlines globally in terms of business losses, it was also a time that changed the behavior of both consumers and markets. One of the most resonant views in the airline industry is that passengers are choosing to fly on non-stop routes for fear of catching the virus. Ronojoy Dutta, CEO of low-cost airline IndiGo, who spoke to Pranav Mukul, expects the trend to continue, and said the carrier is trying to capitalize on it by expanding as the only non-stop service to new international markets. Used to be. He also talked about shaping the aviation industry in the context of the revived Air India.
The festive season witnessed some strong passenger numbers. Is this momentum likely to persist?
It has been a very strong Diwali. We achieved 87 per cent load factor within a few days. On one day – November 8th – the capacity of our system was the highest ever, even pre-Covid. So, some good things are happening on capacity and revenue. It has been a strong season and we are optimistic about the way forward.
In terms of aircraft deliveries awaiting IndiGo, are you looking to delve deeper into your existing markets or go broader and create new ones – both in terms of domestic and international?
We certainly want to grow at the international level in a big way. Pre-Covid, international was 25 per cent of our capacity. We want to grow both domestically and internationally, but I think in about 5-6 years from now, international will be around 30-40 per cent of our capacity. International will grow faster than domestic. During covid, we have expanded a lot in tier-2 and tier-3 stations and the good news is that demand is coming back from metro to metro segment as well. Once this air bubble has expanded to a regular schedule, there are a lot of new markets that we want to see fly in – Moscow, Tel Aviv, Milan, Nairobi, Bali. But of course we will have to wait for the Covid restrictions to be lifted.
What is the strategy behind your plan for international expansion?
The thought process is that there is demand in those markets and travelers from those markets are not able to come to India without stopping. So, whether it is Nairobi or Düsseldorf, they all stop in Doha, Abu Dhabi, Dubai, etc and so on from Bali and Manila, they stop in Singapore or Bangkok. So it’s all one-stop. We will consider making these connections non-stop, which is a good thing from a customer’s point of view and a competitor’s point of view. So we are very optimistic about these markets because there is no constant competition in those markets.
It seems that customers are preferring non-stop flights instead of one-stop due to COVID. Is this trend likely to continue in the long term?
Absolutely. This non-stop versus one-stop has long been a recurring issue in the industry. I’ve tried various non-stops from the West – in Air Canada, I tried Toronto-Delhi, United, we tried Chicago-Delhi and then Air Sahara too, we tried London. The problem is that these non-stop flights face a lot of one-stop problems. Between Delhi and London, we assumed there were 22 ways to get there – via Oman, Dubai, Amsterdam and people never paid a premium for non-stop. But that has changed, and as a result you are seeing United moving from San Francisco to Bangalore and American from Seattle to Delhi. These things were unimaginable. But now I believe it is here to stay and it works for us.
How much of your growth strategy is being determined by the single-fleet strategy and the product you offer?
The good thing about the Airbus A320 family (A320, A321, A321XLR) is that they have normal cockpits. The same pilot who can fly an A320 can fly an A321 and can fly an A321XLR. So there is no fleet complication but the product at the back is different. So, we are not getting into the complexity of the fleet. We have ATR aircraft, which of course is a separate fleet, but the analysis we have done in different airlines shows that beyond 20-25 planes, it doesn’t matter. If it’s less than 25 planes – that is, if you have eight in one fleet and 14 in the other, you’re in big trouble. But if you have 50 of one and 60 of the other, it doesn’t matter. We had the same thinking in CFM vs Pratt because now our fleet is so big that even if we have two engine types, they are big enough in number where complexity isn’t there.
In the light of Air India disinvestment and Akasa coming in, how are you shaping the competition?
First of all let me tell you that I am very happy with the disinvestment of Air India. This augurs well for the country, the aviation industry and IndiGo too, and I will tell you why. Having a competitor who was politically motivated and not driven by basic economics was not healthy for us as a taxpayer. It also had a lot of unfair advantages – if slots were made available in Mumbai, they always got first preference. All those things are also out there and so, I think it’s a good thing for the industry. Will there be more competition? Sure. But on the one hand there is some degree of separation between Vistara and Air India and us. They are full-service carriers, not us. They’ll fly wide-bodied planes to London and New York, we’ll fly narrower planes to a range of 6-7 hours.
Indigo did many charter flights during Kovid. Does this have the potential to translate into a sustainable business strategy for the airline?
Charters has been a positive surprise and I think, it is a permanent change. Let me give you a few examples – we chartered for religious groups in Nairobi, we chartered three for student groups to Tashkent, we chartered for shipping companies all over the world, we chartered for Male, and Now Phuket. We have done a lot of wedding charters. It’s a pretty solid business, and apart from passengers, we’re also doing cargo charters – Singapore, Yangon, Hanoi. We see charters as a sustainable revenue stream for ourselves. Are we even considering scheduled services for these cities? of course we are. I didn’t know there was so much demand in these cities.