New Delhi: After spending two decades building India’s largest domestic airline, IndiGo is preparing for its next act: becoming a global airline by carrying Indian travellers to international destinations through hubs in India, according to its top executive.
“Twenty years have gone into building essentially a domestic airline... That’s now our fort,” Rahul Bhatia, promoter and managing director of IndiGo, said in an interview with Mint.
“The next stage of evolution has to be that we can carry Indians from here, through a hub or hubs, to the world,” he added.
Bhatia noted that this traffic has historically gone to European, Southeast Asian and Gulf carriers. “That’s economic wealth we need to bring back to the country; not only IndiGo, but Indian carriers generally have that responsibility.”
To be sure, IndiGo has been flying to dozens of destinations across the Middle East, Southeast Asia and Central Asia since 2011, when it first started international operations. However, it has yet to launch its own long-haul services to Europe or North America. Instead, it relies on codeshare partnerships with overseas carriers for onward connectivity.
Currently, IndiGo has a 20% share of international traffic from India, according to data from the directorate general of civil aviation (DGCA).
The first step is to further densify the domestic network before launching long-haul, Bhatia said. A later phase could see IndiGo carry passengers between third countries via India, such as “from Europe to Australia, or from China to Africa”.
In June 2023, IndiGo announced the purchase of 500 Airbus aircraft, with deliveries scheduled to begin in 2030 and end in 2035. IndiGo’s order came on the back of an earlier order of 480 planes that runs until 2030 for the carrier.
Bhatia said the next phase of growth will also see InterGlobe’s hospitality business — including Accor’s portfolio in India from Raffles to Ibis — being listed within the next two years, while IndiGo’s BluChip loyalty business standing on its own feet as it scales up.
The airline is positioning BluChip, which has over 10 million members, as a future standalone business. “It’ll earn its own money... any inventory exchanged will be sold at market prices,” Bhatia said.
Defending market leadership
In India, where IndiGo is a rare airline to survive and succeed despite the vicissitudes of civil aviation, Bhatia points to the management’s “... fetish about maintaining and improving our cost leadership”. This is crucial in an environment often marked by turbulence from fuel price volatility and geopolitical events, which businesses have little control over.
IndiGo’s success in gaining a dominant share in the Indian skies has also raised concerns among regulators. Bhatia, however, explains that one should analyse the market share.
“We need to break it down a little, because there's constant discourse about it: ‘Hey, 65% market share, what's happening?’ I think we have done a poor job of not educating the world at large,” he said, adding that about one-third of the 66% share comes from markets where nobody else is flying.
“That one-third represents, give or take, 250 city pairs where no other airline flies. It’s not that nobody is allowed—everybody’s welcome. We are fulfilling our duty as a good corporate citizen to our country by connecting cities that have never been connected before; there is a massive list of them. One-third of our production is to unique markets. In the markets that we actually compete in, our share is not 66%, it’s only 44%,” he explained.
Some of these cities where no other carrier flies include Agra, Bareilly, Bhavnagar, Nashik, and Tuticorin, according to Bhatia.
“So, while the world seemingly begrudges us for our scale, what they don’t appreciate is what we do to bring the hinterland in—integrating it into the mainland,” he added.