IndiGo is a low-cost airline based in India. With a market share of 49.9% and 229 aircraft in service, it is no secret that IndiGo has immense growth potential. Already, the airline is making forays into expanding to new destinations in Europe as well as to points in Asia.
A recent Skift report likens IndiGo’s expansion to that of Emirates. While IndiGo doesn’t have the kind of financial backing or widebody fleet as Emirates, they do have something incredibly powerful: low costs.
IndiGo offers some incredibly low fares on many routes, including some longer routes. For example, if you’re flying between New Delhi and Istanbul, IndiGo charges around half the price of Turkish Airlines.
Why low fares matter
In India, low fares are an important factor in a price-sensitive market. As we’ve seen in the Indian aviation market, low-cost carriers have driven full-service carriers to offer lower prices. This was one of the factors which contributed to the demise of Jet Airways. The market thrives on price wars, and, in the end, passengers get cheaper flights.
Beyond that, IndiGo’s operations are scaled to offer the lowest possible fares. Unlike Jet Airways, IndiGo is a low-cost carrier. By operating one aircraft family in a single-class configuration lacking traditional full-service amenities, IndiGo isn’t trying to compete with product. They’re competing on price and doing a fantastic job at it. After all, they have a tremendous market share, which has grown and grown over the years.
IndiGo’s state of affairs
Jet Airways have stopped flying, Air India are struggling and SpiceJet posted a loss. However, IndiGo posted a profit in their recent financial report. An Indian airline turning a profit is, unfortunately, a rare event. But what IndiGo’s report shows is a glimpse into the priorities of Indian passengers. If the majority of Indian passengers prefer low-cost over onboard product, maybe IndiGo has the right idea.
Could IndiGo really build a global network?
The answer is yes. IndiGo has plenty of A321neo aircraft on order and has expressed interest in launching flights to Europe and East Asia. Although passengers shouldn’t expect showers or gold, blinged-out suites onboard, IndiGo could offer something else entirely: an alternative.
The Gulf carriers have an immense share of Indian passengers flying to the Middle East and beyond. Because of their far-reaching network, their ability to offer one-stops from major markets to destinations in the Americas and Europe has meant they consistently hold a large share of the market. IndiGo can bite right into that market by offering long-haul flights from key Indian markets, at lower prices.
There is some relief for the Gulf carriers, since plenty of existing premium passengers would likely not move their business to IndiGo. IndiGo are unlikely to offer any kind of premium seats like Air Asia does. Even then, IndiGo can’t reach destinations in the Americas or far corners of Africa with A321LRs.
As a result, the Gulf carriers could still maintain existing levels of service to India (or increase them). Likewise, European carriers still have a significant footprint in the Indian market, and many will still benefit from connecting passengers coming from partners.
IndiGo is already the largest carrier in India. Their operations are scaled to short- and medium-haul flights. However, long-haul expansion could be in the cards. With newer, fuel-efficient, narrowbody aircraft, IndiGo can offer passengers flights to key long-haul destinations without significantly altering their business model.
Would you fly IndiGo to and from India? Do you think IndiGo could grow to the scale of a carrier like Emirates? Let us know in the comments!