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IndiGo to continue dominance despite Tata’s thrust

IndiGo, the industry leader, is expected to continue its dominance in Indian skies despite Tata Sons’ massive aviation asset build-up.

It is expected that the large fleet and extensive routes of this low-cost carrier will help protect its enormous domestic market share.

The airline has a 58% domestic market share and ferries approximately 6 out of 10 domestic passengers.

The airline has a fleet of 275 aircraft and flies over 1,200 daily. In the pre-pandemic period, it connected more than 70 domestic and 24 international destinations.

This compares to the potential strength of Air India-Tata combined, which could be over 200 aircraft.

IndiGo is able to quickly add aircraft, and can accelerate induction by approximately 5 planes per calendar month.

Its fleet consists of narrow-bodied aircraft, which limits its operational reach.

 

A combination of Air India and Tata will fly Air India’s 117 widebody and narrowbody aircraft as well as Air India Express’s 24.

Combining the wide-body aircraft, well-trained crews, valuable airport slots and proven operational standards gives the combine an edge in ferrying international passengers.

These aircraft will be operated on more than 4,000 domestic routes and over 1,800 international routes.

“Clearly, IndiGo has carved a dominant position on the domestic airline market in the last few years and, in the pre-pandemic period it was the only Indian airline that demonstrated the ability to generate healthy profits,” Suman Chowdhury, Acuite Ratings and Research Ltd Chief Analyst, stated.

“The Tata Group will benefit from a greater variety in its aircraft fleet but it is important that they streamline their operations and create the necessary synergies in order to be cost-competitive.

 

He said that while operational restrictions are less severe in the period following the pandemic, passenger traffic will increase rapidly, but fuel prices remain high. The key difference for the airline industry is the ability to control costs.

Vipula Sharma, Brickwork Ratings’ Senior director, Ratings, and Head, Infrastructure Ratings, said that “Post pandemic the airline recovery was erratic.” Indigo with its more stable finances will maintain its market share while other players rebuild. The market’s structure will only emerge when regular business travel and economic activity reach pre-pandemic levels, and the Tatas have a firmer strategy with the airlines. Ronojoy Dutta, IndiGo Wholetime CEO and Director Ronojoy Dutta spoke out to IANS. He acknowledged that the competition will only get more intense.

 

“There are three new potential entrants. The Air India Alliance, Vistara, and AirAsia India (India) Alliance will be the most formidable. They will emerge as a powerful player. There is no doubt about it. Dutta stated that IndiGo has three lines of defense to protect itself against competition.

“Our first line defense is having the lowest cost structure anywhere in the world. Our engines are also becoming more fuel-efficient. Our service standard is followed by our traction with customers in terms our network. Build a strong network, ensure great connectivity, and ensure you have high frequencies (on-time!) between major destinations. Dutta also stated that the airline will be entering into code-share agreements in order to strengthen its international network, as well as connecting smaller cities.

Codeshares are very important internationally. We have a codeshare agreement with Qatar Airways. We already have a codeshare agreement with Turkish Airlines and are eager to expand it. The airline recently entered into a codeshare agreement to fly with American Airlines.

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