It is arguably one of the biggest startup stories that have come out of India over the past couple of decades. One fine day in 2005, Rahul Bhatia and Rakesh Gangwal, co-founders of IndiGo, signed up to order 100 Airbus A320 aircraft at the Paris Airshow. A previously unheard-of entity signed up for such a big aircraft deal and then went on to collect all its aircraft. Seventeen years later, IndiGo is one of the largest customers of Airbus and the largest airline in India by fleet and market share. That is the story of IndiGo in summary so far.
IndiGo's Numbers Keep Getting Bigger
IndiGo has hit it out of the park, with consistency as its key measure—be it of its product or punctuality. The airline used a financial structure to keep it afloat in the initial years. This was called the sale-and-leaseback model. When IndiGo goes out and negotiates an order with Airbus, due to the rapport they share and their large orders, IndiGo gets the aircraft at the best possible price.
When the aircraft is ready for delivery, IndiGo would pay for it and immediately sell it to a lessor. Then, it would go on to pay rent for using the aircraft in the years ahead. Due to this back-to-back purchase and sale, IndiGo would make a few million dollars per aircraft. The SLB model allowed IndiGo to have an aircraft exit its fleet after six-seven years of use and bring in new aircraft to replace it.
Since the 100 aircraft were ordered in 2005, IndiGo has ordered another 180 A320 family aircraft in 2011, 250 in 2014, 300 in 2019, followed by 500 aircraft in 2023. Besides, IndiGo ordered 50 ATR turboprops as well, which it utilises to fly on routes that cannot take a jet aircraft yet.
On the occasion of its 17th anniversary, IndiGo is operating about 1,900 daily flights and connecting 79 domestic destinations and 27 international destinations.
IndiGo's Massive International Ambitions
There is a certain swing in its step, which shows it is ready to pursue bigger international ambitions. Under Chief Executive Officer Pieter Elbers, IndiGo is pursuing a new strategy called 'Towards new heights and across new frontiers'. The airline is rushing to expand into new international markets. IndiGo used to operate to 25 international destinations at the end of June 2022 and is now on track to take that number up to 32 very soon.
In August 2023, IndiGo launched flights between Mumbai and Nairobi, and Jakarta. From Delhi, IndiGo has launched flights to Tbilisi, Georgia, and Baku, Azerbaijan, this month. In September, IndiGo will head to Tashkent and Almaty in Kazakhstan. In many cases, no Indian carrier operates to these destinations.
IndiGo is not just building these routes for Indian travellers to these countries, but in some cases, also offering Indian airports as the transit hubs for connecting traffic. For instance, there is no direct connectivity between Tbilisi and Bangkok, and IndiGo is now offering one of the shortest connections between the two stations via Delhi. The airline had already moved from being a point-to-point carrier to offering connections in India long ago. It could prove crucial for Indian airports to become the international hubs they desire.
IndiGo's management says that it would want to fly to more routes in the five–six-hour flying range from India. IndiGo's CEO, on a recent conference call, said that they did not know yet how much range the Airbus A321XLR would bring, so they have still not figured out where they would fly the planes.
The A321XLR is a new variant of Airbus' popular A321 aircraft, which adds an additional fuel tank to fly farther. The aircraft was expected to bring a range of 4,700 miles, which would theoretically cover all of Europe and Asia and most of Africa from Delhi. That could mean IndiGo could fly to western Europe and the Far East on its narrow-body aircraft.
Besides its own aircraft, IndiGo has currently wet-leased two Boeing 777 aircraft from Turkish Airlines and operates Delhi–Istanbul and Mumbai–Istanbul segments with these aircraft. For these flights, it also added the option to purchase a hot meal on board.
With the 777 operations, it would know if it can fill up a big jet or not and take it from there. There were rumours about an IndiGo wide-body order in July 2023. Reuters reports that this order is still being considered. IndiGo might just be taking its time nailing down the economics before taking this forward as the logical next step.
IndiGo has also taken to selling code-share flights on Turkish Airlines, allowing IndiGo to sell its customers the option to buy a ticket to destinations it does not operate on its own for now, such as those in western Europe. Apart from generating revenue for the airline, this will also generate data for IndiGo as to where it should focus its energies when it is ready to fly to these destinations.
Watching Its Back
IndiGo has been turning into a very different version of itself since when it started. It is actively exploring a loyalty programme to keep its customers engaged as it cruises towards the 100-million-passenger target it has set itself this fiscal. It might also be a move to flank itself from the challenge that a combined and reinvigorated Air India Group will bring as the number two.
IndiGo also recently announced a move to launch a venture capital fund, borrowing a leaf from the book of Airbus and JetBlue, some of the other aviation companies that run such funds. With a fund focused on early-stage aviation and consumer focused companies, IndiGo will be in touch with everything that could contribute to the future of aviation first-hand and integrate it into its own operations when the invested company is ready to offer it.
The Endgame
IndiGo did not come this far without making some maverick moves and it does a good job standardising its thought process and implementing it across its vast network to make it count. With over 950 aircraft yet to be delivered, the airline is working towards getting all the bilateral rights it can where it hopes to build a profitable operation for international flights from India, perhaps before the number two gets there.
In the process, it is experimenting with hot meals, wide-bodies, venture capital and loyalty programmes. From here, India on IndiGo wants to become international on IndiGo as well.
Ajay Awtaney writes about aviation and passenger experience at LiveFromALounge.com, and Tweets at @LiveFromALounge.
The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.
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