IndiGo's 2012 profit will be a fraction of last year's Rs 650 cr: Aditya Ghosh

IndiGo, India's most profitable airline, is witnessing a slump in profits in FY 2012 on  the back of higher fuel costs and low margins, airline's president Aditya Ghosh told Business Standard here on Wednesday.

The Gurgaon-based low cost carrier had seen a 18% growth in profits to Rs 650 crore in FY2011 but is now  feeling the pinch of adverse operating environment. With 51 planes and nearly 20% market share IndiGo is the second largest airline by passengers flown.

"Margins were under huge pressure because average price of fuel is now higher than what it was in 2009. There has been a growth in revenue and we will turn out to be profitable at end of the year. It will be much smaller profit than we have done in previous year,'' he said.

Ghosh refused to divulge the profit figure for 2012 but said it "will be a fraction'' of Rs 650 crore profit which it made last year.

"For us profitability means that we are able to get spare parts on time, pay salaries on time, maintain integrity of schedules and plan for growth," he stated.

According to Ghosh, India's aviation growth story can sustain if the goverrnment incentivises and rewards efficient operators.

He said the government could reward by offering discounts in fuel charges and discounts in airport charges and that will serve as an incentive on all operators to perform better and fix their own house.

"I am firmly of the view that we can not have situation where capacity goes down and there is less number of planes flying when market is growing at 15% as that would  lead to  a rise in fares. If fares start rising there will be an impact of number of people flying and whole growth story will start crashing down,'' he stated.

This year IndiGo will be adding nine planes to its existing fleet of 51 planes. Ghosh said he expects to double the size of international operations.

Currently 3-4 of the planes fly on international routes and we may deploy 5-6 of our planes for foreign routes.

"We have just added Vizag and we will be adding 2-3 more routes this year but the focus will be on adding frequency on international routes,'' he said.