With more than 17% market share, Indigo has just crossed Air India to become the 3rd largest player in Indian aviation and the largest in the LCC segment. It announced an order of 100 Airbus A320s for a price of US$ 6 billion during the Paris Air Show in 2005 which stunned the world of Indian aviation. But its recent announcement to buy an additional 180 Airbus A320s which includes 150 new A320s (A320neo) for a price of US$ 15.6 billion which are 15% more fuel efficient than other flights has stunned the entire world. Everyone across the spectrum has sat up to take notice of a LCC in India started just 5 years back!
This deal was of a higher value than Etihad or even Emirates who inked deals with Airbus over the last couple of years. The deliveries of the first aircraft would start in 2016 and would go on till 2025. But the biggest questions in everyone’s mind are the locations where Indigo would use its 280 aircraft and the way it would finance the entire deal.
The Indian aviation market is set to grow magnanimously upto 2025 that Boeing and Airbus expect a total of 1000 aircraft in operation by then putting India in the 3rd place in the world compared to its present 9th place. Even today, 20 years after the open skies policy, just about 1% of the travelling population travels by the aviation industry. This in itself shows that till date all the carriers have just about reached the tip of the iceberg. There is a long long way to go.
Indigo expects to finance this deal by its planned IPO which is widely expected to be strongly over – subscribed. The A320neo jets which would offer fuel efficient engines, lower costs and longer travelling range would go a long way in helping Indigo realize its dream of flying internationally. If all goes well, Indigo’s international services would start in August / September this year as it completes the mandatory five year period. Routes in Middle East, South East and South West Asia are expected to be covered in its plan. A320neo’s increased operational range of 1 hour over the A320 would help them fly longer routes like Hong Kong and Shanghai.
The growth in Indian aviation is expected to fuel the development of many more airports and increased infrastructure. Indigo seems to have parked their idea on this theory. And if things go their way as they are going currently, they are on the right track. Of the present 100 aircraft, it has ordered, it has inducted only 34 in its fleet while the other 5 are leased. It keeps rotating its aircraft to keep the long term costs low.
Indigo seems on its way to take Indian aviation to a world – class level not with luxury like Kingfisher but with the business acumen of its founders, Rakesh Gangwal and Rahul Bhatia of InterGlobe Aviation Pvt. Ltd.