Proposed airfare cap on regional routes a holistic move: IndiGo President

Says capping ticket prices and the 2% cess on air tickets on the whole will help develop better air connectivity

IndiGo's President Aditya Ghosh today said the government's proposal to cap airfares on regional routes at Rs 2,500 is a holistic move to expand the market, on a day when the shares of the airline's parent company InterGlobe Aviation soared 17% on debut trade.

The stock's performance even "beat my own expectations", he said on the sidelines of listing ceremony of the InterGlobe shares.

In afternoon trade, shares of InterGlobe rose nearly 17% to Rs 892.95 on BSE.

"It's fair on the part of the government to seek something in return (to help develop a larger market). In isolation, the capping ticket prices and the 2% cess on air tickets may not look fair, but on the whole it will help develop better air connectivity," Ghosh said.

In the draft aviation policy, the government has proposed a cap of Rs 2,500 on airfares in regional routes besides a 2% levy on all air tickets to boost air connectivity.

Ghosh said the new regional connectivity plan would help open up huge opportunities for regional airlines but was quick to add that his airline has no immediate plan to enter the sector as his present plane types do not suit that.

"Entering the regional aviation space does not make sense for us now as our current planes are not economically suited for that," he said.

He also added that IndiGo has no plan to expand its international operations as of now.

Noting that the airline, launched on August 6, 2006, has grown to fast in scale of operations, complexity and delivery, Ghosh said, "the risk is not about demand, which is already there in aplenty. But the risk is about execution and meeting those demands."

On the new proposed aviation policy, he said he would prefer "a policy and regulatory environment that is fair on everyone in the industry and not just a few. What we need is a fair policy environment that gives a level-playing field to all stakeholders and not just some getting pitched against the rest and vice versa."

When asked about whether the company's networth has returned to positive territory, Ghosh answered in the affirmative but refused to share the number saying listing related regulatory requirements does not allow sharing of specific financial information.

While filing for the IPO the company had said its networth had turned Rs 439 crore negative as of June 30, the day it filed for the IPO, after the management and promoters took out a huge Rs 1,500 crore in dividends.