India’s top airline says wait for new planes limiting growth

BENGALURU, India – India’s biggest airline IndiGo said on Wednesday, August 3, the wait for new planes was limiting its growth during a strong pickup in demand for air travel as pandemic restrictions are lifted.

“I wish we had more aircraft,” outgoing chief executive Ronojoy Dutta told analysts after the company reported a narrowing of losses for the June quarter from a year ago.

“The travel market is growing quite strongly. We are limited by the number of aircraft we have. Given that, we will try and push load factors (filling available seats), but if we had more aircraft we would fly to more destinations,” Dutta said.

IndiGo has 730 A320neo planes on order from Airbus, making it the world’s biggest customer for this popular single-aisle model. But planemakers face challenges meeting delivery schedules due to supply chain problems.

Dutta said IndiGo did not want to lease older planes.

The company reported its highest ever quarterly revenue for the three months ended June 30, boosted by a 145% increase in capacity and a load factor of about 80%.

But soaring fuel costs and exchange rate moves left IndiGo making a loss.

The company said fuel prices almost doubled, leading to a near fivefold increase in aircraft fuel expenses to 59.90 billion Indian rupees ($756 million).

However, yields, a metric of profitability, rose 50.3% to 5.24 rupees per kilometer as airlines raised fares.

While travel demand is set to be seasonally weak in the current quarter, Dutta expects the company to be on the path to profit in the quarter ending December 31 as more people travel during holiday season and yields remain strong.

While competition in India’s aviation sector is heating up, with the launch of Akasa Air and a return of full-service carrier Jet Airways, IndiGo’s biggest rival SpiceJet Ltd is facing some turbulence, forcing India’s regulator to reduce its schedule by half.

“Competition is increasing…but the capacity is quite limited at this point. One of our major competitors has reduced capacity a lot over the last year or two, that has helped us a lot,” Dutta said, without naming the airline.

IndiGo’s parent InterGlobe Aviation posted a loss of 10.65 billion rupees for the June quarter, compared with a 31.79-billion-rupee loss a year ago, when many Indians avoided flying during the second wave of the pandemic. – Rappler.com

$1 = 79.1880 Indian rupees