On April 25, low-cost carrier IndiGo placed a firm order for 30 Airbus A350-900 aircraft, worth $9 billion. This is the Rahul Bhatia-led airline's first purchase of widebody aircraft after operating two widebody planes on the Delhi-Istanbul route for the last 15 months (since February 1, 2023).
IndiGo, whose parent is InterGloble Aviation, also has the right to buy up to 70 more of the Airbus aircraft.
With a fleet of 358 aircraft, comprising 312 Airbus A320 family planes, 44 ATR aircraft, and two Boeing 777 planes, IndiGo, with its 60 percent share in the domestic market, has clearly shown it knows how to be efficient and effective.
The low-cost carrier's entry in the widebody segment has been the subject of speculation since it began operating the two Boeing 777s on the Delhi- Istanbul route, and more questions are being asked now.
One of those questions is whether IndiGo, widely considered one of the most financially prudent airlines in the world, is finally looking at complete ownership of widebody aircraft?
Also, is the purchase a sign that the airline is planning to become a full-service carrier? And is IndiGo targeting the long-haul markets of the United States, Canada, and Europe through this endeavor?
Moneycontrol tries to answer a few of these questions.
Why did IndiGo need widebody aircraft?
The widebody aircraft are not an IndiGo-specific factor but a need for India. The country's widebody fleet has remained stagnant for the past 15 years, according to aviation consultancy CAPA India, and Indian airlines urgently need 60 more widebody planes to serve long- and ultra-long haul markets by financial year 2031-32.
During a webinar called 'Outlook for Wide-body Aircraft in India', CAPA India said the country's long- and ultra-long haul market is "ripe for disruption, provided that Indian carriers lead the charge".
Long and ultra-long haul operations can be structurally profitable given the strong demand for non-stop connectivity, CAPA India said, adding that higher pricing thresholds and stability are visible.
Was this the right time to place an order for widebody aircraft?
IndiGo's low-key announcement of its first widebody aircraft purchase, amid the ongoing Lok Sabha elections, has created speculation about the timing of the order.
But a look at Airbus' backlog of 8,626 jets is enough to address that speculation.
At the end of March 2024, Airbus reported a backlog of 8,626 jets, of which 7,765, or 90 percent, were A220 and A320ceo/neo family narrowbodies, and 861 were widebody planes.
Airbus delivered 735 commercial aircraft to 87 customers around the world in 2023, including 96 widebody planes.
On widebody aircraft, Airbus currently delivers three A330 family and around five A350 family aircraft a month, the company said in its latest financial report.
Airbus plans to move to a rate of 12 A350 jets a month by 2028, superseding previous plans to reach 10 by 2026.
Given the current rate and order backlog, and mapping it against the production rate estimates, IndiGo is likely to start getting regular deliveries of its A350 aircraft after five years, which would be a bit late for the airline that prides itself for being "on-time".
What are the benefits widebody aircraft for IndiGo?
Widebody aircraft are specifically designed to be optimised for long-haul point-to-point routes. They have much longer ranges compared to narrowbody planes, are faster than their smaller compatriots, and can carry nearly double the passenger load.
On average, the Airbus A350-900 has a range of 15,000 km, flies at a cruise speed of 900 km/hr, and has a seating capacity of 350 passengers.
Narrowbody aircraft such as the Airbus A321, on average, have a range of 7,500 km, a seating capacity of 210 passengers, and fly at a cruise speed of 800 km/hr.
Additionally, on long-haul flights, widebody planes give passengers more room to move around, especially during meal services.
Widebody planes also have dedicated rest areas for the cabin crew.
Furthermore, widebodies generally allow for more significant overhead bin space, meaning most passengers will have access to their personal items mid-flight, and fewer passengers will have to retrieve gate-checked bags at their destinations.
The upward trend of domestic traffic traffic in India, better regional connectivity and better investment environment also present a viable business case for wide-bodies to be deployed on high-volume domestic routes.
Wide-bodies on domestic routes also prove to be a high-yield option for airlines, providing carriers more revenue per available seat kilometer.
Larger planes also enable airlines to carry more passengers to airports with limited slots
What are the challenges involved in having a widebody fleet?
Widebody aircraft, despite being the symbol of engineering excellence in the aviation industry, often come with additional challenges for airlines because of their size and the costs to acquire and operate them.
Furthermore, few domestic markets provide year-round demand that can fill the large cabins of widebody aircraft, requiring connecting hubs to bring in more traffic.
Historically as well, one of Jet Airways founder Naresh Goyal's biggest mistakes was the early 2000s purchase of a mixed fleet of 10 widebody Airbus A330 and Boeing 777 planes for his collapsed airline.
Jet Airways was forced to lease out up to 70 percent of its widebodies to the likes of Turkish Airlines, Oman Air, Thai Airways, Gulf Air, and Etihad in 2008.
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