IndiGo seeks approval from govt to launch international flights

IndiGo seeks approval from govt to launch international flights

New Delhi: Budget-carrier IndiGo plans to launch international services on 15 routes starting from the middle of next year, according to a proposal it has submitted to the aviation ministry.

The Gurgaon-based carrier, which has a 16.8% share in the domestic passenger market, will complete five years of local operations in August, meeting a key requirement for local airlines to fly overseas.

IndiGo, with at least 16 Airbus A320 aircraft to augment its fleet of 32 A320s between now and 2011, plans to launch international services in a phased manner from August, the airline said.

The carrier has shortlisted 15 sectors it wants to connect, including Dubai, Bangkok, Singapore, Kathmandu, Jeddah, the Maldives, Abu Dhabi and Sharjah, it said in the draft proposal, which was reviewed by Mint.

It has sought to launch most of its flights from New Delhi and Mumbai, while those to West Asia will be from Kozhikode, Kochi and Thiruvananthapuram, besides between Chennai and Singapore, keeping the flight range of its Airbus 320 in mind.

On 17 March, Mint had reported that the airline has sought in-principle approval from the government for a 2011 international launch so it can negotiate with airports and vendors. The ministry did grant the approval, but the second and tougher part involves seeking rights for each of the cities the airline wants to fly to now.

The ministry is considering the proposal, said an official on condition of anonymity.

“The winter schedule is already under way, so there is still a lot of time before the summer schedule," the official said. “There is no hurry."

IndiGo’s president, Aditya Ghosh, confirmed that the airline will go international in August once the approvals come through.

Last month, IndiGo executives met officials of the civil aviation ministry to convince them that rights granted to low-cost airlines will not eat into the market of full-service carriers such as Air India, Jet Airways (India) Ltd and Kingfisher Airlines Ltd, as the “passenger class is different", said a second government official, who also spoke on condition of anonymity.

The presentation argued there was potential to be tapped by Indian carriers in the international market, especially in West Asia, South Asia, and South-East Asia, where existing flights are running at an occupancy of 70-80%.

Besides Air India, Kingfisher and Jet, dedicated airlines such as Air India Express, the low-cost international arm of Air India, and more recently, SpiceJet Ltd also fly on the West Asian and South-East Asian routes.

IndiGo is not the only one seeking international rights. Jet Airways, Mint had reported on 21 September, also made a similar presentation to the aviation ministry, asking the government to grant it more rights to European cities but also pleading to go slow on foreign airlines that have taken up a disproportionate share of the Indian air travel market.

Besides Jet Airways, additional international approvals sought by Kingfisher and SpiceJet are being kept in abeyance for now, the second official said.

Foreign carriers control at least 65% of the international traffic to and from India.

“There was an imbalance," said G.R. Gopinath, who started the country’s first low-cost carrier, Air Deccan. “We have had more foreign airlines coming into India—Air Arabia, Air Asia..., etc., but we have not been able to start services in reciprocity because of lack of capacity and the five-year rule. The competition is good for the consumer. It’s also good for IndiGo. They will now have to fight the best like Tiger Airways and Air Asia."

An aviation analyst, too, sees Indian carriers buoyed by domestic growth pushing for the overseas market.

“We estimate the capacity of Indian carriers in the international segment to increase at a CAGR (compound annual growth rate) of 15.7% during FY2010-13E, at a rate higher than the growth in the aggregate capacity (12% CAGR), thereby gaining market share from the international carriers in the same duration," Jasdeep Walia of Kotak Institutional Equities said in a November report.