Tuesday, July 13, 2021

Cargo is huge opportunity; path to recovery is to reduce cost & add capacity: IndiGo CEO

Mumbai: The stock of India’s largest listed airline ‘IndiGo’ has gained nearly 2x from June 2020 lows. In turbulent times caused due to the Covid pandemic IndiGo, market share has risen to nearly 55% as of May 2021 from nearly 48% as of January 2020 (pre-covid times).

However, the entire aviation sector has been bleeding with losses including IndiGo, and the airline plans to raise Rs 3000cr via QIP. ET NOW caught up with Ronojoy Dutta, CEO, IndiGo to understand the outlook on the aviation sector and the path to recovery for the airline.

The focus is not on gaining market share or share prices but the immediate goals are to focus on better capacity, better fleet, focus on quality and what we can do with our network said, Ronojoy Dutta. The plan is to get into the right cities with better capacities. “there are so many international opportunities all around us, I am so impatient for international opportunities to open up...and we are ready for it with fleet and everything” added Dutta.

Management plans to add Neo engines that are 15% more fuel-efficient. We are getting rid of 100 fuel-inefficient airplanes and getting 100 efficient fuel planes over the next 2 years…we don’t focus on our share price and market share, they are a fallout of what we do, we have strong ESG policy to reduce carbon footprint.

“The path to recovery is to reduce cost and add capacity,” said Dutta. Adding more capacity reduces unit cost and distributes fixed cost for the airline and eventually as recovery takes place Load factor and yields will follow. India has the lowest yield in the world, there is no room for yields to increase and there is a significant percentage of the population (nearly 90%) which is yet to migrate to air travel in India.

Speaking about Business travel Dutta said that business travel stood at 20% of revenue pre-Covid, in the worst scenario it was 8%, now it is 10-11%. He sees a slow recovery to about 13-14% for business travel and believes eventually yields will pick up although slowly.

12/07/21 Poonam Saney/ETNowNews

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