InterGlobe Aviation Ltd. signalled it sees room to raise airfares further after saying passenger demand had remained resilient despite higher fares, extending a pricing strategy the airline first outlined during its fourth-quarter earnings call.
During its first-quarter earnings call on Thursday, management said pricing discipline remained intact, passenger loads continued to hold up despite higher fares and the airline would keep testing higher yield levels.
The remarks mark a shift from the airline's fourth-quarter earnings call in May. At that time, IndiGo said it had introduced fuel surcharges and was increasing fares to offset higher aviation fuel costs but was still assessing how much of those costs customers would absorb. On Thursday, executives said those pricing actions had supported earnings and that demand had remained resilient.
ALSO READ: Indigo Q1 Review: Brokerages See FY28 Recovery Despite Fuel Cost Pressure
Pricing Outlook
Chairman Rahul Bhatia said during the May earnings call that IndiGo needed to increase fares to protect itself against higher costs and that the airline had not yet seen demand weaken.
"For the moment, what we are seeing is as we take the fares up, the market is inelastic to these hikes and fares," Bhatia had said during the fourth-quarter earnings call.
In Thursday's earnings call, Chief Financial Officer Gaurav Negi said the airline had already taken pricing measures during the June quarter.
The quarter was marked by "a constructive pricing environment" and IndiGo's ability to "pass through a part of the elevated fuel and operating cost pressure in a disciplined manner," management said in its prepared remarks.
Negi also said the airline's revenue environment improved on the back of "pricing actions" alongside healthy load factors.
ALSO READ: IndiGo Defers Salary Hike For Senior Employees Amid Aviation Sector Headwinds
Demand Holds
Management said pricing discipline had remained intact in the current quarter.
"We are able to push up prices and the loads are also sticking," Negi said while discussing the airline's outlook. He added that IndiGo would continue "testing higher levels of yields."
The airline reported a 21.3% year-on-year increase in yield during the June quarter, which management attributed to disciplined pricing actions had helped lift yields and passenger unit revenue.
ALSO READ: IndiGo Q1 Results: Airline Slips Into Net Loss Even As Revenue Climbs 20%; Fleet Count Falls
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.