IndiGo, one of Asia’s largest budget carriers, plans to charge passengers for checked baggage as the airline braces for a potentially fierce price war in the Indian air transport market, which shows signs of recovery from worst of Covid.
IndiGo, operated by InterGlobe Aviation Ltd., failed to implement the so-called tariff unbundling in February – just before a deadly wave of the pandemic hit the South Asian nation – even as the branch India’s Civil Aviation Authority has ruled that carriers can start offering zero-baggage and no-hold baggage fares. Regulatory caps on Covid-related tariffs and capacity prevented IndiGo from making a decision at the time, chief executive Ronojoy Dutta said in an interview on Tuesday.
“We have spoken to the government about it,” Dutta said. “We wait for everything to calm down before we lock something. “
IndiGo joins Go Airlines India Ltd., which is also seeking to decouple baggage fees from airline tickets to position itself as a very low cost carrier. IndiGo’s decision to make ticket prices even cheaper will intensify competition between carriers known for their fares so low that they barely, and often do not, cover the costs. The crushing price war has bankrupted many airlines in what was one of the fastest growing aviation markets in the world before the pandemic.
Revenue rebound
IndiGo is “unlikely” to raise funds through a sale of shares to institutional investors as previously planned, with air travel to India recovering from the worst of Covid infections, Dutta said. India in October allowed airlines to operate at 100% of their national capacity ahead of the pandemic, but international flights remain suspended until at least November 30.
“Frankly, I don’t think we need it now because of the lack of a third wave, and the income is coming back,” Dutta said.
IndiGo – the world’s largest customer for Airbus SE’s best-selling A320neo jets – has no plans to fly routes such as London that require wide-body jets, Dutta said. With the carrier mulling over widebody operations for a long time, it decided it wouldn’t compete with Vistara – a joint venture between Singapore Airlines Ltd. and the Tata Group – which, as a full-service carrier, has a stronger foothold in the long-haul market with Air India Ltd., Dutta said.
Despite this, IndiGo will expand its international routes faster than domestic to capture the increase in traffic in and out of India in the seven hour window where there are not enough nonstop flights, including to cities. like Moscow, Cairo, Tel Aviv, Nairobi, Bali, Beijing and Manila, Dutta said. International routes will account for 40% of the carrier’s capacity in five years, up from 25% currently, he said.
India’s low-cost airline market will be crowded with billionaire investor Rakesh Jhunjhunwala’s new airline Akasa, Dutta said. Air India, a state-owned company, which is sold to the Tata group, and Vistara have “little space for themselves, which is good, and they are separated from us” because they are going to operate as a full service. carriers, he said.
