IndiGo orders 180 planes; makes aviation history

As India consolidates its position as an economic power to reckon with, homegrown companies are going around the globe with bulging purses.

On Wednesday, the third-largest airline in the country, IndiGo, made aviation history by placing a tentative order for 180 A320 planes — including 150 of the new A320neos.

It is the biggest-order ever made by an airline in commercial aviation history. The deal is valued at around $15 billion at list price.

The Rahul Bhatia-promoted budget airline, which started with a bang in 2006 when it ordered 100 planes, will also become the first customer to buy the Toulouse-based aerospace company’s new variant of A320 — A320neo, a revamped variant of the European aircraft maker’s bestseller jet that Airbus plans to introduce in the market in 2016.

An IndiGo spokesperson said deliveries of the new planes were expected between 2016 and 2025. The airline has yet to decide on the engine type and a firm order is expected in two months.

The new version of the A320 will cost IndiGo $6 million more than the classic model. The older version had a list price of $81.4 million in 2010.

Bhatia said the new planes, which are 15% more fuel efficient than the existing ones, will enable IndiGo to continue to offer low fares and tap emerging opportunities in the aviation market. “Ordering more A320s was the natural choice. The opportunities to reduce costs and to improve our environmental performance were key to our decision,” he said.

India’s airline industry has been recording consistently high growth over the last one year, even at high fares. This has pushed many carriers to plan capacity expansion for the coming times.

In November, as per the statistics put out by the ministry of civil aviation, air passenger number grew 26.6% at 48.75 lakh from 38.48 lakh in the same month last year. This kind of spurt in air traffic has seen IndiGo’s smaller rival Spicejet order 30 Boeing 737s and 30 Bombardier turboprop planes last year. State-owned airline Air India and largest airline Jet Airways have also ordered Boeing 787 Dreamliners.

Last year, Airbus predicted that India will need 1,030 commercial aircraft in the next 20 years to meet its rapidly growing demand for flying. “This order positions IndiGo to take full advantage of the predicted growth in Indian air travel,” said John Leahy, chief operating officer (customers), Airbus.

IndiGo currently operates a fleet of 32 A320s and in November flew past Air India to become the third largest airline after Jet and Kingfisher when it cornered a market share of 17.3%. In the same month, the airline logged the highest seat factor in the market at 91%.

IndiGo has yet to take a decision on how the order would be funded. “The order is still 5-6 years before kicking in and the company has time to decide on funding options,” told Aditya Ghosh, chief executive officer, IndiGo, to a wire agency.
— with inputs from agencies