Saturday, July 29, 2017

IndiGo makes first move in pursuit of the Maharajah

Eager to spread its wings and fly long haul, no-frills airline IndiGo has expressed interest in acquiring the international operations of Air India (AI) after the Union Cabinet on June 28 gave an in-principle nod to privatise the state-owned carrier. IndiGo is the first off the block in pursuit of the Maharajah.

Rakesh Gangwal and Rahul Bhatia, IndiGo’s elusive founders, in an hour-long conference call with investors on July 6, clarified that InterGlobe Aviation, which runs the airline, is interested in AI’s international business which includes the low-cost arm Air India Express.

Given that AI’s international business comprises direct flights to the US, UK, Europe, Southeast Asia and Australia, Bhatia was only stating the obvious when he said: “It [AI’s global operations] would provide [IndiGo] rapid entry into restricted and, in some cases, closed international markets.”

As for AI’s domestic business, Gangwal and Bhatia say it will be considered subject to how the government presents it to buyers—with as few  liabilities as possible.

IndiGo’s bid, if it fructifies, will pave the way for the airline’s entry into long-haul international routes, where AI is the current leader with a 17 percent share of passenger traffic, followed by Jet Airways (14.53 percent) and Dubai-based Emirates (9.5 percent). IndiGo, which flies to seven short-haul overseas destinations, has a 4 percent share of the pie.

With or without AI, though, IndiGo is charting its own long-haul flight plan that will be low-cost. “Full service [where checked baggage, meals, beverages and comforts such as blankets and pillows are part of the ticket price] just does not work for us,” said Gangwal on the investor call, which Forbes India was privy to.
29/07/17 Anshul DHamija/Forbes