At more than 60%, IndiGo’s India market share is one of the highest for any airline in a domestic market across the world. But its larger strategy now is becoming a more global airline from a purely domestic one, Pieter Elbers, who was brought in as chief executive last year from Air France-KLM, tells Arindam Majumder. Edited excerpts:
Q. It has been a year of aggressive expansion adding international destinations where Indians hardly travelled before. Are those yielding money?
A: It is a strategy that we launched a year ago — that we build our own network, develop partnership, and expand connectivity. The idea was to expand the domestic network which will complement the international connectivity as they connect to the rest of India via our hub in Delhi. That is what is nicely coming together. Before Covid we had around 350 routes, today we have 500. Some of the routes like Nairobi and Jakarta are really doing well.Q. Can IndiGo replicate the story of domestic growth in terms of connectivity in the international routes?
A: Absolutely. We started with the Middle East where most of the traffic was being carried by foreign airlines and now those are dominated by us. Now we are going to places which were not connected before.
Through Nairobi, we have touched African soil. The same goes for Jakarta, and Central Asia. Those connections have also enabled some transit traffic via Delhi like from Tbilisi-Delhi-Phuket and I think that is very much in sync with the government policy to develop India as a global aviation hub and powerhouse. With the rise of the Indian economy, this is also the right time to start building that and IndiGo is giving wings to the nation here.
Q: You now have multiple partnerships with global airlines. How have those developed?
A: We have two types of partnerships — the first one is a bit traditional where airlines fly to points in India and then connect to the rest of India through IndiGo. It brings in some extra consumers, but the benefit is also in terms of making foreigners aware of the name IndiGo. In India everyone knows IndiGo, but that’s not the case in other parts of the world.
The second type is with Turkish Airlines where we fly our leased aircraft into Istanbul and connect to the rest of the world. We have the Indian community who fly to Istanbul and then continue onwards. There are also Europeans who are now connecting to the rest of Europe through us.
That is a great preparation for us because we will get the Airbus 321 XLR and we will start flying to places like Geneva, Athens, Rome, but also in Asia, like to China and Seoul. So, all the work we are doing today is part of a larger strategy which is becoming a more global airline from a purely domestic one.
Q. As you become a global airline, will you transform from a no-frills airline to a more hybrid one responding to the demands on the longer routes?
A: We are doing a lot of changes like the one in catering. We continue to develop our product and I think the philosophy is we have enough size to develop our own products, which is a bit new internationally. The catering is more involved now. You might call it a hybrid. But what we want to do is develop our products to that of international customers.
Q: So probably business class in the A321 XLRs?
A: We have not taken a decision on that yet because the Indian market grows so fast. The speed of market development is so fast that the decision on what is going to be the precise configuration will be taken as late as possible. So, for now we have kept all options open.
Lot of startups, new companies are being founded in India and they will all go international. I think the world will see a major change in India where it was mostly used for sort of outsourcing business processing, to a supplier of the world. All that needs travel and at one point needs a different class of travel.
Q. Is the airport infrastructure prepared to support big ambitions like yours?
A: I think the Indian airports are also embracing this philosophy. Some of the airports were designed never with an ambition of becoming a connecting hub like in Singapore or the Gulf. So, they must make all kinds of changes in immigration procedures, connecting passengers and luggage. I am actually very pleased with the cooperation with both the airports as well as the government on modifying and adjusting wherever it is needed to make those connections and the fact we already have sizable connecting percentages in Delhi speaks for that potential.
Q: The Indian market is an effective duopoly now. With the consolidations coming, do you see the industry’s pricing power improving?
A: It is an evolution which we have seen in mature markets like in the US and Europe where there are larger carriers and new contenders. Sometimes maturing means less growth but here it is still growing, leading to a further expansion of the larger carriers. In terms of pricing power, India has never matched the input cost, as it is one of the most competitive ones in the world. I think it’s a bit too early to call if consolidation is improving that. Don’t forget that we’re just two years after Covid.