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Analysis: What to make of IndiGo's 7-airport strategy

The airline will be launching flights to Leh and Darbhanga in February, Kurnool and Agra in March, Bareilly and Durgapur in April and Rajkot in May.

January 13, 2021 / 03:59 PM IST
Representative image

Representative image


IndiGo, India’s largest carrier by fleet and domestic market share, has announced that it would launch seven new stations starting next month until May of 2021. This is the first time that the airline has made an out-of-turn announcement where it has given out its medium-term plans and released the station list without details about connectivity, number of flights or flight timings.

The airline’s last few announcements have been sketchy and came at weird timings. Just before midnight on December 31, the airline said there had been a hacking incident and data could make its way into the public domain. Likewise on a day when the country and aviation fraternity was glued to the transportation of the Covid-19 vaccine from Pune, it made an announcement of new stations, which are subject to slot allocation and regulatory approvals.

The seven stations

The airline will be launching flights to Leh and Darbhanga in February, Kurnool and Agra in March, Bareilly and Durgapur in April and Rajkot in May.

Leh, the only operational airport in the region, has attracted airlines due to its high yield in the peak months. The airport sees three distinct peaks: the tourist season when people from across the country flock to see the world famous Pangong Tso; the end of the tourist season when the locals migrate to other parts of the country for work; and the pre-tourist season traffic, which sees reverse migration. The congested airport has challenges such as a uni-directional approach, limited bays for parking and weather-linked cancellations.

Close

Darbhanga, which was operationalised in November, is very close to Patna and almost overlaps it in terms of catchment area. While Patna has tremendous challenges due to limited runway length and apron space, Darbhanga has a longer runway, which helps the airline plan longer flights without any load penalty. For repatriation, airlines had to rely on Gaya instead of Patna since aircraft cannot take off with a full load from Patna and fly to the West Asia or Southeast Asia. Patna is one of the few airports in the country where IndiGo operates and does not have a commanding lead over its peers in terms of capacity deployed.

Kurnool and Bareilly

The surprising ones are Kurnool and Bareilly, where airports are not operational but waiting for necessary clearance to begin. Both would see ATR operations — 25 of which are part of the IndiGo fleet.

Kurnool is the judicial capital of Andhra Pradesh and would see a lot of government traffic as the airport becomes operational. Currently, the nearest airport is Hyderabad in Telangana, over 200 kilometres away.

Durgapur

Durgapur has struggled to attract airlines and it is a big stamp of approval for the airport and its location now that the market leader is set to launch flights. The mineral-rich Andal-Durgapur-Asansol belt had not been able to maintain regular air connectivity until it was supported by RCS-UDAN.

Rajkot

Rajkot was one of the money spinners for Jet Airways. The airline at one point operated four daily flights timed in such a way that they would connect to their European and London operations. While IndiGo does not have European operations, the challenge to transfer passengers connecting to other airlines would remain since the majority of IndiGo flights operate from Terminal 1 while all international flights operate from Terminal 2.

The airline was scheduled to start flights to Agra in March 2020. However, with Covid-19 linked restrictions halting all air traffic, the plan never took off. IndiGo holds routes such as Bengaluru-Agra under RCS-UDAN and one would expect the same to start along with a few other routes.

The start months

Leh typically starts getting tourists by the end of March, with the peak being June and the season culminating with the Leh festival. A start in February gives the airline enough time to make its mark in the market and its presence felt before it can start attracting and commanding traffic.

Darbhanga being new does not have the navigational aids and thus has seen cancellations in the last few days due to the winter fog. As the weather improves in February, the airline would have over 10 months to plan for the next fog season and hope that the airport has better navigational aids next season.

For Kurnool and Bareilly, IndiGo will have to wait for the airport to be operational. The rest would be dependent on fleet availability and the rules in place. As of now, the government has allowed 80 percent of pre-Covid capacity to be deployed. While this does not apply for UDAN routes, the airline could look at trimming other routes and starting new stations, in case the capacity caps are not gone by then.

Rajkot is the last off the block, with the hope that international traffic would have resumed by then.

Change in strategy?

The airline has always had a strategy of starting a limited number of stations and ensuring they can be connected to major metros and secondary cities. This not only helped keep costs low, but also helped offer choice to the market like no other.

However, lately the airline has focused on creating multiple hubs and is open to having stations that add incremental traffic to the network instead of selecting one that strengthens its position only at a single place. This change, obviously, is due to the size and for an airline it is to analyse the network effect and its cost benefit versus a station in isolation. This essentially means that routes to a particular city could be loss making but the passengers they bring to the airline network would help the airline as a whole.

With the airline’s CEO repeatedly talking about economic growth being the motive to get into the hinterland, the airline could deploy more such capacity in cities that have smaller airports instead of opting for cities from where it can offer more connectivity.

 
Ameya Joshi runs the aviation analysis website Network Thoughts.
first published: Jan 13, 2021 03:59 pm

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