IndiGo is looking to increase the money it earns from passengers beyond ticket sales, as it develops its ancillary services, premium offering and loyalty programme. The airline's chief executive officer, Willie Walsh, said the scope to generate more revenue from these businesses remains significant, with its loyalty programme still at an early stage.
Ancillary revenue per passenger rose to about Rs 590 in the September quarter from around Rs 525, Walsh said during the company's Q2 earnings call. He added that the airline sees room to increase this further.
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"We have seen growth in the per passenger ancillary during the second quarter, went up from about Rs 525 to Rs 590, which is encouraging. And I think there's still scope for further development in that," Walsh said.
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The opportunity is particularly large when compared with European low-cost carriers. Walsh said Ryanair generates about five to six times the ancillary revenue per passenger that IndiGo does.
"If you look at Ryanair's ancillaries, I think they're about five, six times the average ancillary revenues per passenger that we generate," he said.
Walsh attributed much of the difference to what airlines are required to include in fares in India compared with Europe. This limits the scope for Indian carriers to charge separately for some services that can generate additional revenue elsewhere.
IndiGo is also looking to increase the contribution from its loyalty programme, BlueChip. The programme is approaching 20 million members, and the airline believes it has yet to realise much of its revenue potential.
"We're only scratching the surface of the contribution that loyalty can make," Walsh said.
He said it would take time to build this contribution, but the airline was encouraged by early developments under its new leadership team. BlueChip completed two years in October and has more than 30 partners, according to the company's opening remarks on the call.
The airline is also looking to grow revenue from its premium offering, Stretch. Walsh said the product was gaining recognition among passengers and that feedback had been encouraging. He also pointed to positive figures for the product on international routes.
He identified three areas for further growth: premium services, ancillary revenue per passenger and, over the longer term, the loyalty programme.
The strategy would give IndiGo more avenues to generate revenue from its existing passenger base, rather than relying only on ticket sales. However, Walsh did not provide a revenue target or timeline for these businesses.
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