While Covid was the worst period for airlines globally in terms of the loss of business, it was also a time that changed behaviours of both consumers and markets. One of the views echoed the most across the airline industry is that travellers are increasingly preferring to fly non-stop routes on the fear of catching the virus. CEO of low-cost airline IndiGo Ronojoy Dutta, who spoke to Pranav Mukul, expects this trend to stay, and said the carrier is looking to capitalise on this by expanding into new international markets as the sole non-stop service. He also talked about the aviation industry shaping up in context of a revitalised Air India.
Festival season saw some strong passenger numbers. Is this momentum likely to sustain?
It’s been a very strong Diwali. We hit 87 per cent load factor in a couple of days. Our system capacity on one day — November 8 — was highest ever, even pre-Covid. So, there are some good things happening on capacity and revenue. It’s been a strong season and we are optimistic going forward.
In the context of the aircraft deliveries that IndiGo is awaiting, are you looking at going deeper into your existing markets or going wide and creating new ones — both in terms of domestic and international?
We definitely want to grow international in a big way. Pre-Covid, international was 25 per cent of our capacity. We want to grow both domestic and international, but I would guess that in about 5-6 years from now, international will be about 30-40 per cent of our capacity. International will grow faster than domestic. During Covid, we have expanded a lot in tier-2 and tier-3 stations and the good news is that the demand in the metro-to-metro segments is also coming back. Once this air bubble is expanded into a regular schedule, there are a lot of new markets we want to fly to — Moscow, Tel Aviv, Milan, Nairobi, Bali. But of course we have to wait for Covid restrictions to go away.
What is the strategy behind the plan you have charted for international expansion?
The thought process is that there is demand in those markets and the passengers from those markets are not able to come to India non-stop. So, whether it is Nairobi or Dusseldorf, they all stop at Doha, Abu Dhabi, Dubai, etc and similarly from Bali and Manila, they stop at Singapore or Bangkok. So it’s all one-stop. We’ll look at making these connections non-stop, which is a good thing from a customer’s point of view and a competitor’s point of view. That’s why we are very optimistic about these markets because there is no non-stop competition in those markets at all.
There seems to be a view that customers are preferring non-stop flights over one-stop because of Covid. Is this trend likely to continue in the long term?
Absolutely. This non-stop vs one-stop has been a repeat issue in the industry for a long time. I have tried various non-stops from the West — at Air Canada, I tried doing Toronto-Delhi, at United, we did a Chicago-Delhi and then at Air Sahara also, we tried London. The problem is that these non-stop flights face a lot of one-stop problems. Between Delhi and London, we counted there are 22 ways of getting there — through Oman, Dubai, Amsterdam and people never paid premium for the non-stop. But that has changed, and as a result you’re seeing United doing San Francisco to Bangalore, and American doing Seattle to Delhi. These things were unthinkable. But now I believe it’s here to stay and that works for us.
How much is your growth strategy being dictated by the single-fleet strategy and the product that you have to offer?
The good thing about the Airbus A320 family (A320, A321, A321XLR) is that they have common cockpits. The same pilot who can fly an A320 can fly an A321 and can fly an A321XLR. So there’s no fleet complexity but the product at the back is different. Therefore, we are not getting into fleet complexity. We have ATR planes, which is admittedly a different fleet, but all this analysis that we have done at different airlines shows that beyond 20-25 planes, it doesn’t matter. If it’s less than 25 planes — meaning if you have eight of one fleet and 14 of another, you have big trouble. But if you have 50 of one and 60 of another, it doesn’t matter. That was also our thinking in CFM vs Pratt because our fleet is so big now that even if we have two engine types, they are large enough in numbers where the complexity is not there.
In light of Air India’s disinvestment and Akasa coming up, how are you looking at competition shaping up?
First of all, let me tell you that I am very happy with disinvestment of Air India. It is good for the country, the aviation industry and also IndiGo, and I’ll tell you why. Having a competitor, who was not driven by basic economics but by politics and having a taxpayer as a cushion was not healthy for us. It also got a lot of unfair advantages — if slots were made available in Mumbai, they always got first preference. All those things even out and, therefore, I think that’s a good thing for the industry. Will there be more competition? Sure. But there is some degree of separation between Vistara and Air India on the one side, and us. They are full-service carriers, we are not. They’ll fly wide-bodied aircraft to London and New York, we will fly narrow-bodied planes to a 6-7 hour range.
During Covid, IndiGo did a lot of charter flights. Does this have the potential to translate into a permanent business strategy for the airline?
Charters have been a positive surprise and, I think, it’s a permanent change. Let me give you some examples — we did charters for religious groups to Nairobi, we did three charters for student groups to Tashkent, we have done charters for shipping companies all over the world, we have done charters to Male, and now Phuket. We have done a lot of wedding charters. It is a good solid business, and in addition to passengers, we are also doing cargo charters — Singapore, Yangon, Hanoi. We see charters as a permanent revenue stream for us. Are we also looking at scheduled services to these cities? Of course, we are. I didn’t know there was so much demand in these cities.