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Indigo Airlines – A Silver Lining in Indian Aviation

by Ajay Prakash

IndiGo, India’s largest private airline has been taking several strategic initiatives to re-organize and sustain itself. The airline very effectively used the downturn period for working out a new strategy for attaining growth, once the pandemic subsides.

As on March 31, 2020, the airline had a fleet of two hundred and sixty-two (262) A320 aircraft. At that time IndiGo was operating 1,674 daily flights to sixty-two (62) domestic destinations and twenty-four (24) international destinations. The airline has a market share of sixty per cent (60%) in domestic sectors.

IndiGo A320neo with LEAP 1A Engine – Credit: Airbus

Some key strategic decisions that have been taken by the airline board are listed below.

New Director on Board

Last month, InterGlobe Aviation (the company that owns Indigo Airlines) appointed Albert Saretsky, the former CEO of the Canadian airline WestJet, as a non-executive non-independent director on the board of IndiGo.

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Albert Saretsky non-executive Director IndiGo

According to an IndiGo spokesperson Saretsky will be providing strategic directions to the organization and well as for financial management of the company.

Billing and Settlement using IATA Financial Gateway

On November 5 the airline announced that IndiGo has started using IATA -Billing and Settlement Plan acceptance in Overseas Point of Sales. The objective is to increase distribution and make the sales process seamless. Mr William Boulter, Chief Commercial Officer, IndiGo said –

We are pleased to enable the acceptance of IATA Billing and Settlement Plan, to provide an enhanced yet simplified business experience to our travel partners. This facility will also allow us to expand our distribution reach to travel agents across eleven participating markets, starting with UAE, Qatar & UK in the first phase, and then expanding to the other markets.”

A Large Airbus Engine Order in the Offing

Defying the setbacks and the gloom of the past few months, IndiGo is in talks with Pratt & Whitney and CFM International Inc. for its next batch of jet engine orders. These engines will power IndiGo’s new one hundred and fifty (150) A320neo aircraft. The order is worth well over $10 billion. The airline is the world’s largest customer for A320neo with about 700 planes on order.

Conserving Cash During Downturn

The airline remains cash-rich with over $2.4 billion in cash reserves as on September 30. Also, it is noteworthy that IndiGo has not renegotiated delivery of the new aircraft with the manufacturers and is accepting new planes as per the original schedule.

The airline management is optimistic about the future. According to Ronojoy Dutta, CEO of IndiGo –

We have a stronger economy and we have great confidence in airline travel as best as we can see. As a result, both the disaster and the realistic scenarios are off the table. We seem to be moving along an optimistic scenario.”

The airline hopes to fully recover by early 2021 on the domestic side and by 2023 on international sectors. A ray of hope in a struggling aviation market.

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