Doubling down: IndiGo airline to expand, defend turf despite loss

India’s largest domestic airline, IndiGo, will add 30 percent capacity this financial year to maintain dominance of the world’s fastest growing aviation market, although its parent company has just recorded its first quarterly loss since listing.

The clear market leader with 189 planes and a 43 percent share is unwilling to cede ground to rivals like Jet Airways Ltd and SpiceJet Ltd, Chief Commercial Officer Willy Boulter said.

“We are keen to protect our market share,” he said in an interview.

The airline has said it plans to add to its fleet of Airbus SE A320neos and ATR 72 turboprops at a rate of around 6 planes a month.

Fares fell almost 10 percent in the last quarter but any unilateral increase would be outweighed by the number of passengers the airline would lose and that would hurt revenues and Indigo’s long-term position, Boulter said.

India’s aviation market is growing at 20 percent annually, but a combination of rising oil prices, high fuel taxes, a weak rupee, low fares and intense competition have driven carriers into the red.

The low-cost carrier’s parent Interglobe Aviation reported its first-ever quarterly loss since listing in 2015 of 6.52 billion rupees ($88.99 million) on Wednesday and in the lead-up to the results, shares fell to record lows.

However, as Jet Airways seeks a cash injection, Air India receives fresh government handouts and budget rival SpiceJet’s balance sheet weakens, IndiGo is in the best position as it has the lowest costs, said Binit Somaia, South Asia director at the CAPA Centre for Aviation, a consultancy.

IndiGo’s costs per available seat kilometre were 14 percent lower than SpiceJet and 23 percent lower than Jet Airways in the June quarter, according to data published by the airlines.

“They can ride this out better than others can, without a doubt,” Somaia said of IndiGo. His firm estimates Indian airline industry losses could reach $1.9 billion this year, led by full-service carriers.

To conserve its $1.8 billion cash balance, IndiGo said it will keep leasing its A320neos rather than buying some of them as it had previously announced.

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Frank Hart

Frank Hart

Frank Hart is the sports editor for the Chester Report. He writes and shoots photos of the sporting activities.

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