New Delhi: As IndiGo launches long haul flights to the United Kingdom (Manchester) and Europe (Amsterdam), Pieter Elbers, chief executive officer (CEO) of India’s largest airline, says in an interaction that the next step in the development of Indian aviation should be not adding new airports but having bigger, better and smoother ones. Edited excerpts:
How do you see the domestic market developing for IndiGo as you already have 65% market share? Don’t you think some of the routes are already at saturation level?
I look at a key metric-- seats per capita -- and compare it with the US, Europe, or China. All of them have significantly higher numbers. Even China, despite its lower seats per capita, has four times more seats than India. Given that, and considering projections that the Indian market will double between 2023 and 2030, a compounded annual growth rate of 10-11% doesn’t seem unrealistic. We’ve committed to doubling our fleet in the same period. Whether you look at seats per capita or GDP-related metrics, it all points in the same direction. Of course, we see seasonal fluctuations; for example, last May was muted due to heatwaves and elections. But I don’t focus on monthly DGCA numbers; we are on a long-term mission. Past growth confirms the trend. So, the long-term outlook is robust. For us, market share is an outcome, not an objective.
What is your game plan in terms of addressing the Indian market?
{{/usCountry}}What is your game plan in terms of addressing the Indian market?
{{/usCountry}}We operate four types of services. We operate out of the metros. One could argue that our hub operations, connectivity and metros are a significant part of the GDP of the country and that is both metro-to-metro as well as metro-to-non metro. So that’s one bucket: metro to metro. The second bucket is the metro to non-metro. I would say metro-to-metro (connectivity) probably there’s already so many flights that growth will be somewhat slower than the average. Where we have seen a lot of growth is the metro to non-metro. The third one is non-metro to non-metro. So these are Tier-II/III cities and we’ll connect them. And the fourth one is the regional connectivity scheme, which are these ATR connections. As a percentage, that’s relatively limited, but in terms of giving wings to the nation, connecting smaller communities is there, we’ll continue to focus on these four areas going forward. And, I would say, the largest growth we have seen is from the metro to non-metro areas.
Do you see scope for further expanding your regional aircraft fleet?
Well, that’s a constant process of evaluation. Today we have 46-47 ATRs out of the order of 50, so it’s almost totally consumed. Some routes that used to be operated by ATRs have now matured and can operate with A320s, which frees up some ATRs to do other routes. There’s a certain set of airports which are ATR-only, and we’re evaluating what could be the next step. Again, I think the Indian landscape in terms of the number of airports is evolving. Today, IndiGo operates 91 domestic airports. We have added four recently and will add another four this year, taking it to 95. Today, 90% of the Indian population lives within 100 kilometres of an IndiGo-served airport. Of course, 100 kilometres in a hilly area isn’t the same as between two metros, but the coverage is still quite good.
So I think the next step in Indian aviation development is not per se many more airports. It’s perhaps bigger, better and smoother airports. So I think perhaps a lot of emphasis will be on increasing the capacity of existing airports.
With international expansion enabling both better connectivity for Indian consumers and progress towards India becoming a global aviation hub, what policy changes would you like to see from the government, such as improved visa regimes or incentives for stopovers on Indian carriers to support this ambition?
I would be hesitant about stopover regimes linked specifically to Indian carriers, as I wouldn’t want reciprocal restrictions abroad. Aviation benefits from a level playing field and equal opportunity. I believe our product and costs enable us to compete with others. For India, the next step is improving transfer connection facilities.
IndiGo has been on a premiumisation journey -- introducing Stretch class or the business class -- for the past 7-8 months. How has been the response to the offering in terms of occupancy domestically?
I wouldn’t call it a premiumisation journey, because that would suggest our entire product portfolio is moving in that direction and that’s not what we’re doing. We have a foundation with 130 destinations, 500 domestic routes, and 100 international. On top of that, we introduced the Stretch product on a selective number of routes. Unlike some US airlines that introduced premium products across the network, we have kept it limited. For us, it’s about catering to a select group of Indian consumers aspiring for that product, and preparing for long-haul operations. The response is dynamic. Some days loads are very good, others are low. Customers aren’t yet sure if a flight will have Stretch or not. The Indian market is extremely price-sensitive, with many bookings coming at the last moment.