Tuesday, February 16, 2021

After 2020’s blues, IndiGo boss upbeat on long-term growth

IndiGo proved its mettle in a tough 2020, and chief executive Ronojoy Dutta is optimistic about the low-cost carrier’s outlook in the coming years.

India’s biggest airline entered 2020 on a strong note. In the three months ended 31 December 2019 it had more than doubled its net profit to Rs4.96 billion ($68 million). In the results release, Dutta said that IndiGo aspired to be “50% domestic and 50% international” given that things were going so well on overseas routes.

“We were going great guns to January of 2020,” says Dutta. “We were particularly pleased with the international expansion, which had grown to about 25% of our overall capacity. And, to our pleasant surprise, international margins were actually higher than domestic at that point.”

The airline had additional Airbus A320neo family aircraft coming into its fleet, and the plan was to deploy them on international routes.

“So, we’re feeling pretty good about ourselves and then, of course, the pandemic hit and we had a total shutdown,” he says.

New Delhi, scrambling to contain the rapid spread of the virus, locked down the country at the end of March 2020, all but eliminating commercial air travel for two months.

IndiGo’s focus shifted immediately from growth to cash. Company management outlined possible scenarios ranging from “doom and gloom” where normality would not return for a considerable time, to an optimistic ‘V-shaped’ recovery at the other end. There were several other scenarios in between.

Amid the uncertainty, Dutta and IndiGo’s leadership team had little choice but to abandon its one- and five-year plans, and focus purely on the next two months.

Faced with the collapse of India’s aviation market, IndiGo decided to focus on updating its product for what was likely to be a radically transformed travel market. A key focus involved contactless check-in, and making sure passengers could interact easily with the carrier in a digital format. At the time, the airline’s call centres were seeing extremely high volumes.

Aircraft hygiene was increased through deep cleaning. Transmission of the virus through an aircraft’s air was not seen as a significant risk owing to HEPA filters. One big challenge was the middle seat. There were proposals to block it because some government officials were concerned about the transmission of Covid-19 through shoulder-to-shoulder contact.

“We said that if the middle seat is kept empty, then forget about the airline business,” says Dutta. “We came [with the idea that] the person sitting on the middle seat gets an extra wraparound of plastic because doctors are worried about shoulder rubbing.”

Only in late May did domestic flying resume, but with capacity capped at 30% of an airline’s pre-Covid-19 network, and with fare bands in place. Over the course of 2020 airlines were allowed to add more capacity. At present, they can operate 80% of the pre-pandemic domestic network and 28% of their international network.

Dutta and his team were also adamant that employee engagement stay high, which would also translate into a good experience for passengers. This was especially challenging given the company had to reduce its headcount, including the announcement in July 2020 that it would lay off 10% of staff.

16/02/21 Greg Waldron/Flight Global

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