The country’s largest airline by passengers carried and fleet size does not expect rising competition in the aviation sector to impact its profitability and market share, the company’s chief executive officer Ronojoy Dutta said in the post-earnings conference call on Wednesday.
“Competition is increasing but capacity deployment by others is low. One of our major competitors (SpiceJet) has reduced capacity a lot in the recent past and that is helping us a lot. So far no irrational behaviour by airlines in India in terms of fares,” Dutta said in his last earnings call as the head of IndiGo.
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Dutta added that Air India and Vistara are focused on the international market and he expects any capacity expansion by the Tata Group, which operates these airlines, to be focused on the overseas operations.
He also said that domestic airlines will find it difficult to match the prices offered by IndiGo as their operational efficiencies are very high.
Dutta added that going ahead, yields of Indian airlines will only improve as he expects ticket prices to get back to pre-COVID levels.
“Ticket prices in India were abnormally low and have stabilised a lot in the past year,” Dutta said, adding that in the last six months the crack spread, which is the difference between the price of crude and the price of ATF or aviation turbine fuel, has increased significantly.
He added that while there has been a small loss in passenger load factors due to higher ticket prices, he expects passengers to return as they get used to the new fares.
The head of the no-frills carrier further said that there is also no evidence of revenue weakness in the July-September quarter apart from seasonality.
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IndiGo’s capacity deployment in April-June was 7 percent higher compared to pre-COVID levels and 35 percent higher than in the last quarter of FY22.
The airline has also reached pre-COVID levels in terms of the number of international flights operated despite not having started operations to China, Myanmar and Hong Kong yet. IndiGo has seen a pickup in its operations to West Asian countries and will start operations to Bahrain and Ras Al Khaimah as well.
Furthermore, the airline will add two freight planes by October 2022 to increase its cargo operations.
IndiGo has a domestic market share of nearly 57 percent and has a fleet of more than 280 planes.
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The airline witnessed its strongest revenue performance in the first quarter of 2022-23, resulting in the highest-ever quarterly revenue of Rs 13,020 crore.“Headwinds caused by depreciating rupee and higher fuel prices led to a net loss of Rs 10,643 million (Rs 1,064.3 crore) for the quarter ended June 2022. Excluding foreign currency loss of Rs 14,246 million (Rs 1,424.6 crore), net profit for the quarter aggregated to Rs 3,603 million (Rs 360.3 crore),” the airline said.
