Why IndiGo is the World’s Most Ambitious Airline
Why IndiGo is the World’s Most Ambitious Airline
Issue Overview
It’s still just a teenager. But already, India’s IndiGo is the world’s largest airline outside of the U.S., China, or Europe. And as it celebrates its 18th birthday, no other airline—of any age—has a more ambitious plan for its future. Importantly, IndiGo is pursuing its grand ambitions while making money, as we discover in this week’s feature story.
Importantly, IndiGo is pursuing its grand ambitions while making money. Last week, it reported another set of excellent financial results, in this case for the April-to-June quarter. Figures were somewhat impacted by unspecified compensation from Pratt & Whitney for its GTF engine woes. But a 17% operating margin speaks to the carrier’s dominance of India’s domestic market, the even greater profitability of its fast-expanding international network, its service reputation among Indian travelers, and the privileged aircraft pricing it receives from Airbus (which counts IndiGo as one of its largest customers globally). The airline’s rapid rise was facilitated by weak competitors, some like Kingfisher and Jet Airways which ultimately failed, and others like SpiceJet that continue to face financial difficulties. Its main domestic rival is Air India, now undertaking reforms after decades of ineptitude and cost bloat, all shortcomings helpful to IndiGo as it developed. Air India, if less shambolic these days, is now helpfully consolidating the industry, removing one of IndiGo’s leading rivals—Vistara—as an independent competitor.
IndiGo’s rise, meanwhile, has coincided with India’s rapid economic expansion. As CEO Pieter Elbers stated last week during the airline’s earnings call, “India’s and IndiGo’s growth story have been closely interlinked.” Now, he adds, “as India gears up to become the third largest economy in the world, it’s important that we devise our strategy to not only capitalize on the opportunity but also stay ahead of the curve.”