What Keeps IndiGo Going
IndiGo’s cost per unit is atleast 20 percent lower compared to peers.
It’s no secret that IndiGo is the country’s largest and most profitable airline and what helps it maintain margins is cost efficiency. The low-cost air carrier’s cost per available seat kilometre (CASK) has stayed below its peers for at least 10 quarters now. IndiGo’s CASK was Rs 3 in the last quarter, at least 20 percent less than its two listed competitors Jet Airways Ltd. and SpiceJet Ltd.
Jet Airways’ cost per available seat kilometre has been in the range of Rs 4.2 to 4.5, while that of SpiceJet has been Rs 3.4 to 3.9 over the last 10 quarters.
Why It Is The Lowest?
- A homogenous fleet helped lower maintenance and crew training costs
- Better aircraft utilisation with the fastest turnaround time.
- No frequent flier programme or free meals
Unit costs may fall further as the newer Airbus A320neo and A321neo aircraft that the company has been buying are 15 percent more fuel efficient than their predecessor.
There is also a possibility that cost might increase as the cost of ATR aircraft, that the airline is now introducing, will start reflecting from the current quarter. The first one was put into operation earlier this month.