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Business News/ Companies / News/  IndiGo betting on festive season for demand revival
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IndiGo betting on festive season for demand revival

The airline is seeing its passenger load factor hit close to 70%, which is a gradual improvement from 50%, said Wolfgang Prock-Schauer
  • However, people are still abstaining from making advance ticket bookings as most bookings remain short-term due to pandemic
  • IndiGo Airlines (Mint)Premium
    IndiGo Airlines (Mint)

    New Delhi: IndiGo, India's largest airline operated by InterGlobe Aviation Ltd, is betting on the upcoming festival season for revival of commercial passenger demand, as the airline is gradually seeing flight bookings pick up as states ease travel restrictions.

    The airline is seeing its passenger load factor (PLF) hit close to 70%, which is a gradual improvement from 55%, said Wolfgang Prock-Schauer, president and chief operating officer at 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," Prock-Schauer said.

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

    PLF or Passenger load factor measures the capacity utilization of airlines. RASK or Revenue per Available Seat-Kilometer measures unit revenue for airlines.

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

    "It's our top priority to achieve 60% capacity. But, you can't do it on 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 abstaining from making advance ticket bookings as most bookings remain short-term -- done a few days before taking travel date -- as many are still wary about frequently changing travel restrictions imposed by state, Prock-Schauer added.

    Meanwhile, IndiGo has completed mandatory replacement of Pratt & Whitney (PW) engines, which power its Airbus A320neo fleet, with modified engines before the 31 August deadline set by the aviation regulator.

    "I firmly believe that PW snags are behind us. It's now a matured engine and won't expect any other problems," Prock-Schauer said.

    The covid-19 pandemic has hit the airlines hard as travel demand remained muted after domestic operations were allowed to resume in May after two months of grounding.

    Indian airlines are expected to report consolidated losses of $6.0-6.5 billion in FY2021 and an estimated $4.5-5 billion of funding will be required to overcome the covid-19 crisis, aviation consultancy firm Capa India said in a recent report.

    IndiGo reported its largest quarterly loss during the three months that ended on 30 June, due to muted demand, amidst lockdown and travel restrictions, caused by the covid-19 pandemic.

    The company reported a net loss of 2,844.3 crore for the June quarter, after reporting a profit of 1203.14 crore during the same quarter of the previous year.

    "Lots of new business avenues, like charter flights, and cargo, opened up during covid-19 pandemic. We now have 10 aircraft in cargo configurations. These are quick wins. But, overall goal is to return to profitability. And 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 currently operates about 600 flights.

    "Our priority at the moment is to increase our domestic capacity to pre-covid level by end of the current fiscal. Next would be to reestablish our international network, which will take little more time, due to international restrictions," Prock-Schauer said.

    "International flights currently are only under air bubbles, which have restrictions, so we will wait and see and analyse before starting international operations," he said adding that the airline is also considering purchasing wide body planes for long-haul operations.

    "On wide body plane, since it's a major move, we want to make sure before we decide since we want to earn money from them," he added.

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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.
    Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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    Published: 03 Sep 2020, 07:52 PM IST
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