IndiGo, India's biggest carrier in terms of domestic market share and fleet, on January 24 said that it will soon launch its business product IndiGoStretch on flights between Delhi and Chennai.
The low-cost airline's management said in its post-earnings conference call that IndiGoStretch is already operational on all 20 daily flights between Delhi and Mumbai and the airline has launched the service on the Delhi and Bengaluru route as well.
IndiGo plans to deploy the premium service across 45 aircraft by 2026, compared to its current two-plane configuration, the company's Chief Executive Officer Pieter Elbers said. He added that the airline plans to expand its stretch on 10 new metro routes in 2025.
Elbers also said the IndiGo is looking to speed up the deployment of long-range aircraft.
"Subject to regulatory approvals, we are exploring interim solutions for an earlier introduction of long-range aircraft to our fleet through wet leases," Elbers said, adding that "route and network opportunities are being explored at present."
IndiGo already has two Boeing 777s on wet lease from Turkish Airlines to serve Istanbul routes and is due to begin receiving its first owned widebody aircraft from its firm commitment for 30 Airbus A350-900s in 2027, but said during an earnings call on 24 January that it wants to take long-range aircraft ahead of those deliveries.
According to reports, IndiGo has a agreement in place to lease six Boeing 787-9 twinjets from Scandinavian low-cost carrier Norse Atlantic Airways and begin operations to European hubs from India, potentially including Amsterdam, London and Paris. Norse said in late November that it had a tentative agreement in place to wet-lease six of its 787s in 2025 to a "reputable" international airline.
Gaurav Negi, Chief Financial Officer (CFO) of IndiGo, also said that IndiGo maintains its fleet capacity growth guidance of double digit growth in FY25 when compared to FY24.
The airliner had 437 aircraft in its fleet at the end of the quarter up from 410 in the previous quarter. IndiGo operated at a peak of 2,200 daily flights during the quarter, including non-scheduled flights. IndiGo had started started 2024-25 with a fleet of 367 aircraft and has added 70 aircraft to its fleet in the first nine months of 2024-25.
Negi added that IndiGo's AOGs have started to reduce and going forward IndiGo's spending on AOG mitigation measures will reduce thereby helping its financial performance in the coming quarters.
In Q3FY25 IndiGo's aircraft and engine rentals costs have risen nearly 2.6 times to Rs 758.5 crore from Rs 299.1 crore a year ago.
The parent company of Pratt & Whitney, RTX Corp, had in September 2023 announced that about 600 to 700 engines would be recalled for shop visits through 2026, after the turbine engine used on new Airbus A320neo models were founded to be manufactured with flawed components. This had caused the grounding hundreds of aircraft and affect nearly the entire fleet of GTF-powered Airbus A320neos since September 2023.
The company estimated an average of 350 Airbus A320 family planes per year will be grounded from next year through 2026. The original equipment manufacturer had said it expects the issue to cost up to $7 billion.
Elbers also highlighted that IndiGo will launch flights to three more international destinations in the next few months to increase it international offering to 40 by the end of 2024-25. He also said that IndiGo's newly launched loyalty programme will help the airline garner a higher market share of international customers.
IndiGo has received approvals from the governments of India and Kyrgyzstan and is expected to launch a daily service between Indira Gandhi International Airport in Delhi and Manas International Airport in Bishkek, Kyrgyzstan, from February 15, 2025.
He further said that international expansions account for 28% of all available seat kilometers (ASK), a measure of an airplane’s carrying capacity available to generate revenues. Around 10 percent of IndiGo's revenues also come from its international operations.
IndiGo's management also highlighted that the airline will increase its hedging efforts to reduce the impact of currency fluctuation on its financial performance going forward. Negi told analysts that IndiGo has a dollar exposure of $ 8 billion to currency fluctuations, due to lease agreements, maintenance obligation and rental agreements.
IndiGo parent InterGlobe Aviation Ltd reported a net profit of Rs 2,449 crore for Q3 FY25, falling as much as 18 percent from Rs 2,998 crore a year ago, despite continued demand for air travel. The robust profit in the base quarter was due to the major festival season travel falling during the October-December quarter in the previous year, unlike this year.
nterGlobe Aviation's revenue for the fiscal third quarter surged 14 percent to Rs 22,111 crore against Rs 19,452 crore in the same period previous year, driven by a 12 percent increase in available seat kilometers (ASK) and a 13.5 percent rise in revenue passenger kilometers (RPK). The load factor improved by 1.2 percentage points to 86.9 percent.
The airline's cost per available seat kilometer (CASK), excluding fuel, rose sharply by 23.1 percent year-on-year to Rs 3.25, reflecting the impact of inflationary pressures and higher operational costs. Depreciation and amortisation expenses also jumped 33.6 percent during the quarter.
The increased expenses of the airline, including on airport charges, leasing aircraft, grounded planes, along with lower yields are dragged IndiGo's profits in the October-December quarter. Moneycontrol had in November reported that record domestic travel in India wasn't expected to translate into bumper earnings for local airlines.
IndiGo's revenue per available seat kilometre (RASK) stood at Rs 5.44, whereas cost per ASK (CASK) was at Rs 4.83. The company's RASK rose only 1.9 percent on year in Q3FY25 while CASK rose 6.8 percent in the same period, indicating a significant rise in operating costs over revenues. InterGlobe Aviation's yield per passenger fell to Rs 5.43 in the December quarter from Rs 5.48 a year ago, the company said.
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