It’s a sustainable growth that the newest budget carrier IndiGo is looking at as it chalks out plans to become a 15-aircraft airline flying to 18 destinations by 2007-end.
Plans to operate 40 aircraft to 30 cities on 10% margins
BANGALORE: It’s a sustainable growth that the newest budget carrier IndiGo is looking at as it chalks out plans to become a 15-aircraft airline flying to 18 destinations by 2007-end. By 2010, the carrier wants to reach 30 cities with a fleet of 40 A320s on an operating margin of 10%.
The airline currently operates three aircraft to eight destinations. “We are not looking at grabbing a big market share. As long as we are profitable, we don’t care what our market share is. If fuel prices and competition do not come in the way, we will be able to reach an operating margin of 10% by 2010,” says IndiGo president and CEO Bruce Ashby. And he wants to reach healthy margins through economies of scale.
“We will be able to offer better fares once we scale up to 20 aircraft by mid-2008,” says the former US Airways executive.
The airline, which began operations in August, is currently operating at an average load factor of around 78%, up from 65% in the beginning.
Even its average fare has improved from around Rs 2,000 in August to around Rs 3,000 now. Ashby says that, on an average fare of Rs 3000, the airline would need 80% load factor (on A320) to break even.
With its focus on better services rather then “gimmicky fares”, IndiGo has also been
able to record better on-time performance with departure-within-15-minute (97%) and arrival-within-15-minute (95%). Air Deccan’s on-time performance within-15-minute in August was 76.4%.
The airline’s flight cancellation for September and October (till now) was zero while it was 0.25% since the time it began operations.
Brushing aside apprehensions about the low-cost aviation space being overcrowded, Ashby said that the fleet size (A320s) of budget carriers — Air Deccan, SpiceJet Ltd and IndiGo — put together was around 25 aircraft, which was way below the fleet size of one carrier in the US.
“The world’s largest budget carrier - Southwest - owns 453 aircraft. But, there is still scope for expanding in India,” explained Ashby.
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