Regional Round-Up
India’s Indigo sets A320neo order record
November 1st 2014
At press time, Indian low-cost carrier, IndiGo was expected to have firmed up its record-breaking $26 billion Memorandum of Understanding for (MoU) 250 A320neo jets, a senior executive familiar with the deal told Orient Aviation. Read More »
“We’re still working on some minor additions and revisions to the deal, but we’re pretty much set. We’re aiming at final closing by the end of the month,” he said. The IndiGo commitment is the biggest single A320 family order in Airbus’ history, and is in addition to purchases of 180 of the A320 family made by the Indian low-cost carrier (LCC). “This new order reaffirms IndiGo’s commitment to the long-term development of affordable air transportation in India and overseas,” said Aditya Ghosh, IndiGo’s president.
Speaking to Reuters, the 39-year-old said India was a “highly underpenetrated market” and that the majority of the Airbus narrow-body planes on order would be for growth rather than replacement. The LCC has been India’s only profitable carrier in the past two years, and reported a six-fold rise in net profit, to 7.87 billion rupees ($128 million), in the 2012-13 financial year. Gurgaon-based IndiGo has become the country’s largest airline by market share. In September, it carried 32.8% of domestic passengers, almost double Jet Airways’ 16.7% and Air India’s 16.6%. Rival LCC, SpiceJet also outperformed both full-service carriers and came in second with a market share of 18.6%.
And additional competition is on the way. AirAsia India launched in June, bringing to the table an airline group which manages to operate with one of the lowest unit costs per kilometre flown in the industry.
The Singapore Airlines – TATA Group start-up Vistara is awaiting regulatory approval for operations. Once cleared, Vistara plans to ‘redefine’ India’s domestic market with ‘a brand that aims to set new standards’ by offering a full-service luxury experience’ at low cost. “The biggest risk for IndiGo is how the competition behaves, that is, whether AirAsia and others respond more aggressively now,” Starair’s Vardhan said.
In other news, the Directorate General of Civil Aviation (DGCA) has commenced the recertification of all Indian carriers before a scheduled Federal Aviation Administration (FAA) audit next month. India was downgraded to Category 2 in January, barring its airlines from adding new flights to the U.S. or entering new codeshare agreements with U.S. airlines.
