Rahul Bhatia, promoter of IndiGo, the country’s largest airline by market share said there were plans to induct smaller aircraft to tap the latent potential in India’s growing regional commercial aviation market.
Bhatia, managing director, InterGlobe Enterprises, said the market for regional air connectivity was underserved. “Clearly, there is a market for smaller aircraft. I am not saying it will happen tomorrow. There are plans, but these are not imminent.”
He declined to specify the timeline and whether a separate subsidiary would be established for the group’s proposed foray into regional air connectivity services. “If you ask me if we are interested, probably yes. But it is not immediate. We haven’t decided on the details yet; for instance, if we need a new subsidiary,” Bhatia said.
The airline, which is adding an aircraft every month to its existing fleet of about 70 A320s, said it would advance the completion of deliveries of the 100 aircraft it had placed orders for with Airbus to November 2014. By December 2013, IndiGo would have a fleet of 85 A320s.
Bhatia said despite the planned expansion, the airline had not been able to aggressively add new destinations, owing to capacity constraints. “We don’t fly to several cities because we don’t have planes; for example, the western and southern parts of the country…cities such as Mangalore and Surat,” he said.
On the high ticket prices in the domestic market, Bhatia said the current fare structure was an anomaly. He added while full-service carriers had been slashing fares to compete with budget carriers, an increase in fuel prices and dollar-denominated expenses had forced all airlines raise ticket prices. “The weak rupee and high fuel prices are putting pressure on margins. Airlines are dependent on currency costs. But the religion in IndiGo is to keep prices low; otherwise, I don’t think we can grow 20-30 per cent annually. What you are seeing right now is an anomaly,” he said.
On whether the proposed entry of two new airlines into India - AirAsia and Tata-SIA - and the alliance of Jet Airways with Etihad will put pressure on profitability and prices, Bhatia said, “We are not shying away from competition; we will take them head on. India is an underserved market and there is room for everybody to survive and prosper.”
