In a first, IndiGo opts for bigger Airbus planes

Airline plans to induct 20 Airbus A321neo planes, a larger variant of A320

IndiGo will induct 20 Airbus A321neo planes, a larger variant of A320, as India becomes a battleground for existing airlines and new players. In 2011, the Gurgaon-based airline placed an order of 180 narrow-body Airbus aircraft, including 150 fuel efficient A320neo and 30 A320s. The deal allows the airline to opt for the bigger A321 planes over the A320s and it is exercising the choice now.

IndiGo president Aditya Ghosh told Business Standard the airline had opted to take 20 A321neo, which can seat 30-40 additional travellers than the  conventional 180-seat A320s, which it flies now. Earlier in the year, Airbus announced upgrades to A321neo, increasing its capacity to 236 seats and promising extra five percent reduction in unit costs. It is not clear whether IndiGo will select the 220-seat or the 236-seat configuration.

“Yes we will get 20 A321neo. Airbus is yet to give us delivery dates for them,” Ghosh said. Airbus expects to begin deliveries of the A320neo from 2015 and industry sources said the A321neo might be rolled out for commercial use by 2017.

The airline’s decision to tweak the order and take larger narrow body plane is significant due to changes in the competitive landscape in India..  

At present Air India flies the conventional A321 planes which can seat 172 seats in a twin class configuration. GoAir has ordered 72 Airbus A320neo and Malaysian carrier AirAsia has ordered 264 A320neo. The move to opt for plane with bigger seating capacity will give an competitive edge to IndiGo.

 

"We had the flexibility in our earlier order which we have exercised. Our decision to select the plane is being driven by the fact that aircraft will be able to carry more number of passengers. It will cover Delhi-Singapore and could cover Delhi-Hong Kong routes,'' Ghosh said. Sources said the plane could also be flown on key metro routes such as Mumbai-Delhi and its capacity will come close to Air India's Boeing 787 Dreamliners which has 256 seats.

 

IndiGo which reported Rs 787 crore profit for last fiscal has 70 planes at present and hopes to add another 15 similar planes by end of the next financial year. IndiGo's capacity and passenger traffic increased around 27 percent in last fiscal.

 

Ghosh however ruled out the airline taking wide body Airbus A330s, saying that airline wants to retain its simplicity and also denied plans to buy turbo prop aircraft. "We are not looking at regional operations as yet. We are not looking at ATR aircraft. A new route dispersal guideline policy and regional connectivity policy is expected soon. These policies are bound to change people travel in tier II and III cities. The only reason we are not looking at it is because .our current plane order seems small to service markets we are serving today and we do not want to lose focus,'' he said.

 

Ghosh said the passenger mix at IndiGo is evenly divided between business and non business travellers though it varies according to season. It is increasing the cabin baggage allowance from 7 kgs to 10 kgs for its corporate clients. The airline reported a 65 percent jump in revenues because it flew more number passengers and its load factor (80.6) was six percentage points higher than the industry figure.

 

"I have no problems with fares being low. That is our religion. The problem  that i have and for the  sake of industry is that when airlines start selling below cost.When high cost airline is beginning to charge low fares the cash burn will be  enormous...so where is surprise that the  industry losing money," he quipped."