India deserves more than two major airlines: IndiGo promoter Rahul Bhatia | Company News

“We welcome the competition. Clearly, a country like India deserves more than just two airlines. Just look at China, they have five or six major airlines and some smaller ones. So, this country (India) clearly has room for others to come out,” Bhatia told reporters at an event where IndiGo launched its frequent flyer loyalty program called “Blue Chip” and revealed details about business class on its planes.

IndiGo’s business class, called ‘Stretch,’ will feature 12 seats in a 2-2 configuration on A321neo planes. The first flight with business class will operate on the Delhi-Mumbai sector from mid-November, gradually scaling up to most metro-to-metro routes. The airline plans to serve 12 routes with business class by the end of 2025.

Bhatia said: “We are often held guilty of our market share and nobody spends the time to understand that this market share was not entirely IndiGo’s doing. Some of our growth was of our own volition but some of the growth came because few other airlines fell by the wayside. That offered us the opportunity to grow into that space.”

He stated that if an airline does not have the right cost structure, it will struggle sooner or later. “We welcome competition with the right side of the cost structure but the last thing we want is to be held guilty of being a duopoly, because it is not something that has been of our doing. We understand our responsibility as a service provider to customers,” he noted.

“I would like to say formally that IndiGo will never be found guilty of gouging its customers. That is not just our business. Our business is to keep our costs low, provide affordable fares, fill up planes, buy more planes, fill them up again, and keep that cycle going,” he added. Bhatia and his family currently own about 36 per cent of IndiGo.

In a rare moment, Bhatia got emotional during his speech at the event, stating, “IndiGo and I are here to stay.” He was responding to market speculations in June when he sold 2 per cent of his shares in the airline for about Rs 3,400 crore to fund his other businesses.

While talking to reporters, he also explained the airline’s logic to turn away from the typical “low-cost” airline model. “People give examples of Southwest, RyanAir, and EasyJet to me. Southwest is the low-cost airline in the US and that country has seven other airlines that are operating flights globally. So, Southwest has enough opportunities in that country.”

“RyanAir is similar. They are big in Europe and they don’t want to be in the long-haul market because you have got every guy and his mother (Lufthansa, Air France, etc.) flying long-haul flights. The same is true for EasyJet,” he explained, adding that all this can’t be superimposed on the Indian market.

“In India, we only have one long-haul carrier. And there is no way on planet earth that this is sustainable. We certainly want to play in that market,” he noted.

He stated that even that one carrier (Air India) is not carrying a huge share of long-haul traffic to and from India. “It is these other carriers—which do not belong to the country—that are carrying a lot of traffic,” he mentioned.

Indian carriers have about 45 per cent share in the overall international passenger market to and from India, while foreign carriers hold the remaining 55 per cent share. In the long-haul market, which includes flights to destinations such as North America and Europe, the share of foreign carriers is even higher.

He said that the company is in no way going to forget its fundamentals of keeping its costs down. “Just hang on to one thing. If the company is steeped in making sure that it has the best cost structure, then all of this—business class and loyalty program—is all within that framework. You have to. The day we lose that mojo, it is the beginning of the end. We won’t be doing that,” Bhatia noted.

First Published: Aug 05 2024 | 7:16 PM IST