Friday, October 26, 2018

IndiGo Stays Course Despite Losses

After registering its first quarterly loss in ten consecutive years due largely to price wars, Indian budget carrier IndiGo said on Wednesday said it will neither reduce deliveries nor cut capacity in the near future as it prepares to accept more A320neos from Airbus. The carrier announced a $98 million loss in the three months ending September 30 against a background of an unsustainable level of low fares in India’s domestic market.

“Aviation in India is going through pressures from excessive gasoline prices, rupee depreciation, and intense competitors, all of which have impacted our profitability this quarter,” explained  IndiGo co-founder and interim CEO Rahul Bhatia. “Regardless of this troublesome setting, IndiGo stays nicely positioned because of our value construction and robust balance sheet.” Fuel constitutes more than 40 percent of total costs in India while about 50 percent of costs excluding fuel gets denominated in foreign currency, said Bhatia. “Typically in the airline industry, you would expect to see higher fares to cover the increased costs,” he noted. “However, that has not happened here.”

During a summit held earlier this month in Jeju Island, South Korea, Association of Asia Pacific Airlines director general Andrew Herdman highlighted India’s fiscal “paradox.”
25/10/18 Neelam Mathews/AINonline

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