As IndiGo tops the valuation charts globally, how big is the future of India’s aviation sector?

I joined IndiGo two and half years ago. In my initial conversations with Rahul Bhatia (promoter and MD of IndiGo’s parent firm InterGlobe Aviation), he said: “I know the opportunity for India is enormous. But I don’t know how enormous.” That summarises it.

When I joined in 2022, the mandate was to transform IndiGo into a global aviation giant. Today, India is the fifth-largest economy in the world. By 2027, it will be the third largest. India deserves an airline of a size, scale, and opportunity that is a fair reflection of the country, what it stands for, and what it will be in the future. By that notion, we put a point on the horizon (2030) and launched a strategy towards “new heights and across new frontiers” ⁽¹⁾. Two years later, people have started seeing us connecting the dots — internationalisation, wide-body [aircraft], stretch products, and loyalty link-up with Accor.

How much of this plan has been actioned? How much has been achieved?

There is no end point. If you start somewhere, you put a point on the horizon — 2030. But there is no such thing as a finishing line. Big decisions such as ordering A350 aircraft and having a premium product in metro routes have been taken. But we are only getting started with the tougher aspects such as execution. For example, when it comes to internationalisa-tion, operating flights from Bengaluru or Mumbai to Krabi, Thailand is different from starting operations to Amsterdam and Manchester.

My lesson after two years in India is: go big or go home. That’s the philosophy behind IndiGoStretch, which we implemented in 12 months. We will get 45 Stretch planes in one year. A new Stretch plane comes in every week. It usually takes a long time. This is scalability. The strength of IndiGo and its people is that we can scale up quickly. We had 1,600 daily flights when I joined. Today, we have 2,300 ⁽²⁾.

IndiGo has been a budget carrier for 18 years. Is the trend of premiumisation the reason behind your pivot to business class?

The India of today is different from what it was 18 years ago. India has been evolving and will continue to do so in the next five years. If we are the market leader, we want to be an airline for all business segments. But we do it in a way that is tailor-made. So, you will find our Stretch business products only in sectors where it makes sense. The Delhi-Mumbai Stretch is going very well. It’s the busiest route, the others not yet.

Once we start to fly more long-haul and international [routes], you will want to have Stretch on the busiest routes as well (IndiGo’s codeshare partners already have business class). There are a lot of foreigners travelling in India who are not familiar with IndiGo. This is an opportunity where this product can be familiarised.

We are developing a lot of partnerships. Japan Airlines has tied up with us in our domestic network. Hence, it is not a change of business model at large. IndiGo will continue to cater to first-time flyers, making a trade-up between a two-day train journey and a two-hour flight. If the price is right, millions of such travellers are waiting.

Aspirational India is where the next leg of growth will come from. Do you see a cross-subsidisation in terms of fares?

Not really. [Each domestic flight] has only 12 Stretch seats and the remaining 208 are all economy. India is one of the most value-conscious markets in the world. My belief in our business class is driven by the fact... [that it is] a superior product that is price effective. We have looked at all the elements of a business-class product. You could say, you should have a lounge. But are you ready to pay ₹500-1,000 more to go to the lounge? You may say no. Then, there’s the debate around hot meals, an ongoing topic. We have good quality meals. That’s it.

Even for the premium product, there is a value-consciousness deeply rooted in the Indian consumer’s mind. Our Stretch product is tailor-made for the Indian market.

How has the response been to IndiGoStretch?

We started in mid-November between Delhi and Mumbai. We fly 20 times a day. All of them were operational by the second week of January. Then we started Bengaluru, which is all operational now.

Is the value-conscious Indian customer ready for Stretch?

Of course! From an airline perspective, 12 seats in peak hours are like a drop in the ocean. For some sectors, it may take a bit of time, but we are on a journey to make IndiGo a global aviation giant. We have ordered A350s that will come in 2027 ⁽³⁾.

Then we will have our own wide-body aircraft. We started the loyalty programme in October 2024. We have 3 million subscribers now. That’s faster than anywhere in the world, partly driven by the same value-conscious customer, who is always looking for discounts. We also have a deal with Accor.

What are the key pillars you are looking at in IndiGo’s internationalisation journey?

IndiGo went international in 2012 ⁽⁴⁾, five years after [it started] operations, which was the rule then. The first flights were to Kuwait, targeting Indian workers. Today, we have 260 flights a week for the U.A.E. We started flights to Central- and Southeast Asia. In 2023, for the first time, we landed in Nairobi (Kenya). We now have a foothold in Africa as well. That’s the first pillar: four five-hour flights.

The second pillar is when XLRs (A321XLRs) come in. That will expand our reach to parts of Europe, Asia, etc. These planes can easily make it to Athens, Venice, Bologna, and Seoul. The XLR will also allow us to fly to Bali from Delhi. Currently, we fly to Bali from Bengaluru.

Pillar No. 3 will be when A350s come in. We are accelerating that by taking damp leases for the Boeing 787. Then, the entire world will be a part of our operations. We have announced Manchester and Amsterdam flights this summer.

Are supply constraints in the domestic market giving airlines more pricing power?

Consolidation is happening in all industries across the world. But perhaps due to value consciousness, price sensitiveness, and strong competition, the cycle of airlines coming up and going down has been much faster in India than in the other parts of the world. Today we are in a situation of two large airlines and a couple of relatively young ones. From the perspective of a domestic market, that’s probably a more stable setting, and hence, more continuity is guaranteed.

To make India a global aviation giant, you need to have airlines of a particular size. If we want to compete with Singapore Airlines and Emirates, we cannot be a domestic Indian airline. For way too long, international traffic has been outsourced to hubs outside the geographical shores of India. This is a good time for India to start building it. Domestic consolidation creates stability, but it is also a prerequisite to compete internationally.

Are you concerned about the capacity in terms of the runways and the number of flights you have added?

One of the challenges for India is that we collectively build the ecosystem: hardware, people, and regulatory parts. Hardware is airports, runways, taxiways, access to airport. The fact that both Air India and IndiGo have big orders allows us to sit with all the participants in the ecosystem, and say this is where we are heading, let’s start planning. Big investments are being made in airports. I am optimistic about the steps taken.

In the regulatory framework, a lot of changes are being made. There were a lot of legacy issues in terms of what rules would apply. I would applaud the initiative of DigiYatra. My ambition is we get it for international travel as well because that is not always the best experience yet. Regulations and framework need to be simplified.

The third is people. India has a young population with an average age of 29. We are creating jobs in smaller cities. We fly to nine destinations in the Northeast from Guwahati. That’s creating jobs. We also have the world’s largest percentage of women pilots ⁽⁵⁾.

With the tailwinds of lower crude oil prices, do you think airfares will come down?

It’s a very generic question. With the Mahakumbh, we got questions like airfares are very high. Every Diwali, I know what’s coming. Prices go up not only for flights, but also for hotels. In the long run, we buy the same planes, and the same fuel as other parts of the world. We have the same maintenance, in a market which is extremely competitive.

Over time, there should be a correlation between prices and costs. If there is no correlation, companies will run out of business. That’s what we have seen in India in the past. If fuel prices go up, over time airfares will rise. If they go down, it will be reflected in airfares. That’s the nature of our business.

What kind of IndiGo will we see five years down the line?

You will see an IndiGo that is a proud representation of the nation. IndiGo will operate an incredibly dense domestic network. We currently cover 90 airports. That number will go up. We will build a huge domestic foundation, and from there serve the different parts of the world. The official view is we double in size by 2030.