IndiGo banks on its success to start regional airline

SpiceJet witnessed 82% growth in regional passengers y-o-y though growth base is very small

IndiGo, the market leader in domestic passengers, is planning a deeper plunge into regional operations by launching a separate subsidiary company.

A senior civil aviation ministry official said Rahul Bhatia, managing director of IndiGo, had told the ministry the company planned to form a subsidiary for regional operations, with an initial fleet strength of 18-20 ATR turboprops. There was no timeframe for the commencement of the subsidiary’s operations, the official added.

While an IndiGo spokesperson denied this, an SMS to Bhatia did not elicit any response.

Currently, SpiceJet has the largest regional network---it also flies to Tier-III destinations with turboprop Q-400s. For the quarter ended December, SpiceJet recorded 82 per cent year-on-year growth in regional passengers and a profit of Rs 102 crore.

An industry source said, “IndiGo is likely to order 50 ATR planes and the deal is expected to be announced at the Paris Air Show.”

ATR did not comment on the IndiGo deal. David Vargas, the company’s media relations manager, told Business Standard, “ATR 72-500 is not sold anymore. In the 70-seat aircraft category, we only sell the advanced ATR 72-600. ATR 72 aircraft have been the most popular regional aircraft in India in recent years. We see strong potential for further development of regional networks across the country with these low-operating, cost- and fuel-efficient regional aircraft.”

IndiGo operates 61 Airbus 320 aircraft in a single-class configuration. It primarily deploys these on metro routes, as low-cost carriers. The airline has also stuck to its low-frills identity---on-board meals and drinks are sold, not distributed free of charge.

The government is coming up with a new policy for regional connectivity and routes to 80 towns would be shortlisted and auctioned to airlines. Initially, subsidy would be provided for this---the airline quoting the least requirement would be given charge of the route for two to three years, said a senior civil aviation ministry official.

IndiGo has been embroiled in a tussle with the Ministry of Civil Aviation on the issue of securing 16 A 320 aircraft this year, part of an earlier plan to secure 100 aircraft. For this, the airline has already been given an in-principle approval.

Civil Aviation Minister Ajit Singh has allowed the airline to bring only five of the 16 aircraft. At a meeting of the Aircraft Acquisition Committee this week, it had approved four additional aircraft. However, the minister is yet to approve this.