Cost discipline remains core as IndiGo expands into premium travel

IndiGo says it will preserve its low-cost model as it expands into premium and long-haul flying, while urging a rethink of airport pricing at new hubs.

As IndiGo enters its third decade, the airline says it will retain the cost discipline that made it India’s largest carrier even as it expands into business-class and long-haul operations. It also called for a rethink of how airport charges are structured at new airports, saying the current model puts pressure on airlines’ economics. 

“I think the next logical step... would be to premiumise. So, this is what the pivot is about. We are moving from a pure, low-cost, quick-turn business to a more premiumised offering... This we want, we will ring fence, we will make sure that this part of the business continues to operate the way it has operated, with the cost discipline, with the operational efficiency that we’ve had. And build the rest of it, overlay the other pieces on top of this core,” Aloke Singh, chief strategy officer at IndiGo, told Business Standard. The “ring fence” approach means IndiGo intends to protect its core low-cost domestic business while adding premium cabins and wide-body aircraft for long-haul international routes. Singh said the airline’s domestic narrow-body operations would continue to be the backbone of the business even as it expands into new segments. 

That philosophy also shapes IndiGo's premium products. Singh described Stretch as “the IndiGo version of a business class”, saying it “may not have all the bells and whistles that you have for a traditional business class”, but is “what the market wants” and is "priced appropriately”. He said the airline intends to apply the same cost-efficiency principles to its premium products as it has to its economy operations. 

IndiGo Stretch is a tailored business-class service featuring a 2x2 seating layout, 38-inch pitch, and priority perks on select routes. 

The strategy marks a new phase for an airline that has expanded rapidly since commencing operations on August 4, 2006. From operating six Airbus A320 aircraft and serving 13 destinations in its first year, IndiGo today has a fleet of more than 440 aircraft, operates nearly 2,200 daily departures, connects over 140 destinations, and carried more than 123 million passengers in financial year 2025-26 (FY26). Since inception, the airline has flown over 880 million passengers. 

The strategy is closely linked to the airline’s long-term ambition of becoming a global player. 

“The first 20 years have been... a journey of establishing a stable foundation and then growing to becoming one of the largest airlines in the world. But now we have to convert this airline into a global player, which means driving connectivity between India and the rest of the world, and really bringing home the value of India's geographic position,” said Abhijit Dasgupta, senior vice-president (planning and revenue management) at IndiGo. 

While IndiGo has already outlined its international expansion plans, executives said the broader objective is to position India as a stronger international connecting hub while continuing to expand the airline's overseas network. 

As the airline pursues those ambitions, Dasgupta identified airport economics as a key issue facing the industry. 

Dasgupta said new airports such as Navi Mumbai and Jewar are strategically important because they unlock fresh catchment areas and future growth opportunities. However, he argued that the way airport charges are currently structured creates difficulties for airlines. 

Airport operators typically recover a significant part of their investment through higher charges during the initial years of operation. Airlines, however, cannot simply pass those costs on to passengers because travellers compare fares between airports serving the same metropolitan region.

 

"The way that our airport pricing policy is structured is that the costs that are incurred by airport operators tend to be front-ended in their charges. And that is kind of difficult to justify to a customer who is comparing two airports... But when it comes to growth, I think both (Jewar and Navi Mumbai) will have very important roles to play in IndiGo's future plan," Dasgupta said.

 

Despite those concerns, he said both Navi Mumbai and Jewar airports have started on an encouraging note, and are broadly performing in line with the airline's expectations. IndiGo plans to continue expanding capacity at both airports as demand grows.

 

Another characteristic unique to the Indian market, according to Dasgupta, is passenger booking behaviour. India continues to be one of the world's most late-booking aviation markets, with a much larger proportion of passengers purchasing tickets within the last two weeks before departure than in many overseas markets. At the same time, Indian travellers remain highly price-sensitive, forcing airlines to constantly balance demand, pricing, and capacity.

 

That price sensitivity, he said, makes it even more important for airlines to keep costs under control.

 

According to Dasgupta, airlines have faced a sharp rise in operating costs since the Covid-19 pandemic, driven by higher airport charges, aviation turbine fuel (ATF) prices, and the depreciation of the rupee, which has increased the cost of imported fuel and other dollar-linked expenses. He said ticket prices have not increased at the same pace as these input costs.

 

Airlines themselves have no incentive to make flying unaffordable, he argued, because the industry has ordered hundreds of aircraft that will require strong passenger demand over the coming years. Affordable fares remain the biggest tool for stimulating that demand.

 

The airline has also spent the months following last December's operational disruption strengthening its systems to better handle future situations.

 

"There are customer dimensions... Then there is planned resilience, so to speak, how do we design a network... in a way that there are buffers in the system to absorb some amount of disruptions, how do we synchronise our airplane rotations with crew movement patterns... So, those are some of the areas... there is planned resilience and then there is reactive capabilities, all of which we have been working on," Dasgupta said.

 

The work has included improving customer communication, rebooking capabilities, aircraft scheduling, and crew planning, so that disruptions can be contained more quickly across the network. The airline's focus on operational reliability has helped it maintain an industry-leading on-time performance (OTP) of 80.9 per cent in FY26. OTP measures the proportion of flights that depart or arrive within a specified time of schedule.