GURUGRAM- India’s leading domestic airline, IndiGo (6E), is currently engaged in discussions with ATR, Embraer, and Airbus to potentially order around 100 smaller aircraft, aiming to expand its regional operations.
According to sources familiar with the matter told ET, IndiGo, which presently operates a fleet of 45 ATR-72 aircraft with a capacity of 78 seats each and is set to receive an additional five units this year, is likely to continue its partnership with the Franco-Italian manufacturer ATR. This decision is driven by the desire to capitalize on economies of scale. However, Airbus A220 and Embraer E175 aircraft are also under consideration.
IndiGo 100 Small Planes Order Talks
The strategic move to enhance its domestic network in India comes on the heels of IndiGo’s recent focus on the international long-haul market.
The carrier revealed its order of 30 Airbus A350-900 aircraft on April 25, marking its initial venture into wide-body aircraft procurement.
While the ATRs operate as turboprops, the other two aircraft are jets. In addition to the ATRs, IndiGo’s fleet comprises Airbus A320s and A321s. The airline also has two Boeing 777s on short-term lease from its codeshare partner, Turkish Airlines.
IndiGo, commanding 60% of India’s domestic air traffic, recognizes potential in towns with smaller populations where the demand for air travel is poised to increase. This growth is attributed to enhanced airport infrastructure and the government’s Ude Desh ka Aam Nagrik (UDAN) scheme, which aims to foster and incentivize regional air connectivity.
ATR has projected that India will emerge as its largest market within the next decade, driven by the expansion of regional air connectivity.
“People are seeking greater convenience and faster modes of transportation,” remarked Jean-Pierre Clercin, ATR’s Asia-Pacific commercial head, during a press briefing in February.
“While other modes of transportation are expanding, they are not keeping pace with the growing demand. Consequently, regional aviation is poised to play a significant role.”
Strengthening Regional Network
In 2017, IndiGo placed an order for 50 ATR-72 planes, signaling its entry into the regional aviation market, which was previously dominated by SpiceJet with its Bombardier Q400 planes.
Since then, IndiGo has progressively expanded its operations and now serves approximately 60 destinations with these aircraft. Recent additions to its network include Gondia, Lakshadweep, Jagdalpur, Jharsuguda, and Dharamshala.
According to an IndiGo executive, the ATR-72s have facilitated network development by enabling cost-efficient operations to new destinations that may not generate enough demand to fill a 180-seat Airbus A320.
“Once IndiGo establishes reliable connectivity, the market size expands, allowing the airline to introduce larger A320 or A321 jets,” the executive explained.
Beneficiary of UDAN RCS
The financial difficulties faced by its competitors have prevented them from sustaining flights on the routes awarded under the UDAN scheme. While the UDAN scheme grants three-year exclusivity to the successful bidder, airlines such as SpiceJet (SG) and Flybig (S9) typically discontinue flights on those routes once this period expires.
For example, SpiceJet ceased operations to Jharsuguda in Odisha after IndiGo commenced flights from there in October last year.
“IndiGo’s entry has enhanced service reliability, with hardly any cancellations,” noted a travel agent in the city.
Moreover, the smaller aircraft have provided IndiGo with increased flexibility, enabling the airline to operate flights between two cities during off-peak hours.
Government officials have indicated that investments in regional connectivity will rise following the elections, as it has been established that such investments boost economic productivity.
Civil aviation minister Jyotiraditya Scindia announced in January that the Centre has earmarked Rs 1 lakh crore for expanding the number of airports from 148 to 200 in the next four years.
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