Supply chain disruption a challenge but IndiGo CEO sure of capacity growth

Foresees 13% capacity growth, hints at likelihood of aircraft lease extension; airline is seeing passengers moving from rail and other modes on short duration routes

IndiGo’s fleet plan will proceed nearly as per target and capacity for FY 2022-23 will be 13 per cent higher than pre-Covid time amid a global supply chain disruption that has delayed the delivery of aircraft, engines, seats and other parts.

IndiGo has been forced to ground 20 of its 276 planes due delays in the supply of spare engines by manufacturer Pratt & Whitney. This has delayed induction of new aircraft too.

While the company management had earlier this month indicated a speedier return of older leased planes, IndiGo CEO Ronojoy Dutta said on Friday that the airline has the opportunity to extend leases to slow down the return of planes. This would enable it to maintain current capacity levels. Typically, IndiGo takes an aircraft on a six-year lease and returns them on the expiry of the period. Older Airbus A320 planes are less fuel-efficient and have a higher maintenance cost than the new Airbus A320Neo planes.

“While we are struggling with the capacity issue a little, we are comfortable that our fleet plan will proceed close to where we had planned. For the full year 2023, we still foresee that our capacity will be 13 per cent higher than pre-Covid 19 period. It is a challenge, but we are comfortable we can deal with it,” Dutta told shareholders in the company’s annual general meeting.

While IndiGo will see a modest addition to its fleet till 2023-end there will be an increase in seat capacity as the airline is now inducting higher capacity (232 seater) Airbus A321 aircraft.

Dutta said IndiGo plans to expand its global network but currently is hamstrung due to non-availability of planes. “Wish we had more planes. We have an eye on places like Tel Aviv, Nairobi and Bali and we will go there very soon,” he said.

On the domestic side, he said the airline had added seven new destinations during the pandemic. The airline is also witnessing a switch of passengers from railways and other modes on short duration routes. “ We are giving railways a run for their money. New destinations that we opened – Bareilly, Deogarh, Pantnagar are doing exceedingly well. Better than our expectation,” Dutta remarked.

Responding to a query on competition, Dutta said that each airline has its own unique position. There are enough degrees of separation between different airlines – some operate wide body aircraft on international routes, offer full service product while some are low cost airlines with domestic networks. “We have a strong business model and we are leveraging it to the maximum,” he said.