A low-cost domestic airline has become a formidable player in the toughest period in Indian aviation.
With international travel having been banned for more than a year, and domestic flights still only operating with limited capacity, IndiGo has emerged as India’s largest passenger airline – by far – with a market share of 57%.
“In a country like India, it is imperative to offer competitive pricing schemes and innovative loyalty services to attract and maintain a loyal customer base,” explained Nishant Pitti, CEO and co-founder of travel portal EaseMyTrip. “In this cut-throat sector, carriers need to show immense resilience and the ability to economize further without losing out on the revenue pie.”
IndiGo appears to have fared well in all these factors.
What worked
The 15-year-old airline has succeeded in a marketplace that killed off rivals like Kingfisher and the soon-to-be-revived Jet Airways. The company says it has been able to adapt quickly to challenges, such as a public spat between two senior figures in 2019, and especially the pandemic.
“IndiGo has been fairly adept as a company in changing from long-term planning to capitalise on quick short-term opportunities,” the airline’s spokesperson told Quartz. The spokesperson elaborated that the airline’s decision-making evolved from a methodical, analytical approach to crisis mode and lists several changes: the airline started behaving “like a charter carrier instead of a scheduled airline” and increased use of technology, including customer service via WhatsApp.
Balance sheet
In July, despite larger than expected net losses, the airline reported a surge of 292% in operations revenue on yearly basis. “We conserved cash while simultaneously exploring every possible avenue for generating revenues through charter flights, cargo, and expansion into smaller cities,” the spokesperson said.
Meanwhile, its rivals have been struggling. Vistara’s losses broadened to more than Rs 1,800 crore ($270 million) in the financial year ended on March 31, 2020, compared to Rs 400 crore four years earlier.
For the year ending March 31, the airline turned things around a little as post-pandemic travel began to resume, before India’s devastating second Covid wave in April – losses fell to just over Rs 1,600 crore. Likewise, SpiceJet, the other low-cost airline, is facing losses and finding it to manage expenses after the pandemic hit its operations.
IndiGo’s formidable fleet size will also help in fending off competition. Currently, the airline has 274 aircraft, overtaking Air Asia last year.
Way ahead
India’s aviation sector is still reeling from the damage done by Covid. But as the recovery tentatively begins, experts believe that the pandemic outbreak has come as a blessing in disguise for low-fare airlines such as IndiGo.
Pitti of EaseMyTrip told Quartz that low-cost carriers will be the most preferred option for Indian travellers, and their lower operating costs will work as an advantage, especially in these “unprecedented times”.
The airlines with financial resilience such as IndiGo will be able to enjoy the privilege of first preference at airports.
“We are keen on working with commercially healthy and strong airlines,” said Christoph Schnellmann, CEO of the upcoming Noida International Airport told Quartz, “and also believe we can support them with efficient processes, low-turnaround costs and seamless transfer facilities”.
This article first appeared on Quartz.
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