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IndiGo Airlines predicts third quarter capacity to increase 40% but worries about oil prices
October 29th 2021
Indigo Airlines expects capacity to rise by 40% in its third quarter after passenger numbers almost doubled in its second quarter ending September 30. Read More » However, CEO Ronojoy Dutta issued a warning about rising fuel prices after fuel expenses more than doubled for the three months. The carrier recorded a net loss of 14.4 billion rupees ($US195.5 million), a significant improvement on the Rs 31.7 billion it lost in the June quarter but worse than the Rs 11.9 loss posted in the same period a year ago. Revenue from operations grew more than 104%, to Rs 56 billion, as passenger numbers rose 79% from 6.3 million in the June quarter to 11.2 million in the following three months. The airline deployed about 41% additional capacity in the September quarter as load factors increased to 71.1% compared to 58.7% previously. Yields rose about 20% and international capacity increased by 58% to about a third of pre-COVID-19 levels. “The reduction in Covid-19 cases in the country, increased pace of vaccination and relaxation of the testing norms by the various State Governments [in India]has helped to stimulate demand during the September 2021 quarter,” Dutta said on a conference call. “In line with the increased demand, the Government initially raised the domestic capacity caps from 65% at the end of June to 85% in mid-September. Recently, it removed these capacity restrictions altogether. Further, international destinations and frequencies were increased under the bubble arrangements. All these factors had a favourable impact on our revenues.” Dutta is encouraged by booking trends in October and beyond, with load factor for the month anticipated to be about 76%. “Our average revenue booked per day in October is equal to pre-COVID-19 levels of revenue booked per day in January 2020. It is important to note we are matching January 2020 levels of daily booked revenues while offering 20% fewer available seat kilometres,’’ he said. “On the negative side, oil prices continue to march relentlessly higher. Pre-pandemic, oil prices were averaging US$65 a barrel. Now they are averaging $85 a barrel. Thus, things are looking better on the revenue side but the increase in input costs are cause for concern.”
