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Business News/ Companies / News/  IndiGo bets big on festive season for demand revival
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IndiGo bets big on festive season for demand revival

The airline is seeing its passenger load factor hit close to 70%, says Prock-Schauer
  • With higher demand coming in the festive season, the situation will improve, says Prock-Schauer
  • Wolfgang Prock-Schauer, president and chief operating officer at IndiGo.Premium
    Wolfgang Prock-Schauer, president and chief operating officer at IndiGo.

    IndiGo, India’s largest airline, operated by InterGlobe Aviation Ltd, is betting big on the festive season, trying to revive passenger demand following an increase in flight bookings as states ease travel restrictions.

    The airline is seeing its passenger load factor (PLF) come close to 70%, which is a gradual improvement from 55%, said Wolfgang Prock-Schauer, president and chief operating officer, IndiGo. “We can see a gradual improvement in PLF. Also, fares are holding on and slightly higher fares and improvement in PLF will lead to improvement in RASK," he said.

    PLF measures the capacity utilization of airlines. RASK or Revenue per Available Seat-Kilometre measures unit revenue for airlines.

    “However, I am not saying that we are where we want to be. It needs a lot more improvement. I feel that with higher demand coming in the festive season, the situation will improve drastically," he said.

    The Union government had on Wednesday extended the capacity cap imposed on scheduled airlines on domestic flights to up to 60% of total capacity, up from 45%.

    “It’s our top priority to achieve 60% capacity. However, you can’t do it at one go as it depends on market demand. As we are about to move into the festive season, our goal is to deploy 60% of our pre-covid capacity by Diwali," Prock-Schauer said.

    However, people are still avoiding advanced ticket bookings. Most bookings are made only a few days before the travel date, as many are still wary of the frequently changing travel restrictions imposed by states, he said.

    IndiGo has completed the mandatory replacements of Pratt and Whitney (P&W) engines, which power its Airbus A320neo fleet, with modified engines before the 31 August deadline set by the Directorate General of Civil Aviation.

    “I firmly believe that P&W snags are behind us. It’s now a matured engine and we don’t expect any other problems," Prock-Schauer said.

    Covid-19 hit the aviation industry hard with travel demand remaining muted even after domestic operations resumed in May. Indian airlines are expected to report consolidated loss of $6-6.5 billion in FY21 and an estimated $4.5-5 billion of funding will be required to overcome the crisis, aviation consultancy firm Capa India said in a recent report.

    IndiGo reported its largest quarterly loss during the three months ended 30 June because of the muted demand because of the lockdown to contain the spread of coronavirus. The company reported a net loss of 2,844.3 crore in the June quarter, compared to a profit of 1,203.14 crore in the year-ago.

    “Lots of new business avenues, such as charter flights and cargo opened up during covid-19 pandemic. We now have 10 aircraft in cargo configurations. These are quick wins. However, the overall goal is to return to profitability. These are steps to it," Prock-Schauer said.

    At present, IndiGo operates at least 10% more charter and cargo flights than its scheduled commercial flights. IndiGo operates about 600 daily flights. “Our priority is to increase our domestic capacity to pre-covid level by the end of the current fiscal. Next would be to re-establish our international network, which will take little more time, because of international restrictions. International flights are only under air bubbles, which have restrictions, so we will wait and see and analyse before starting international operations," he said. The airline is also considering the purchase if wide body planes for long-haul operations. “As it’s a major move, we want to be sure before we decide as we want to earn money from them," he said.

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    ABOUT THE AUTHOR
    Rhik Kundu
    Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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    Published: 04 Sep 2020, 05:48 AM IST
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