3 min read.Updated: 14 Nov 2019, 10:50 PM ISTRhik Kundu
Ronojoy Dutta, IndiGo chief executive officer, says we are seriously working on our wide body aircraft plans. We eventually want to fly to London, and we can’t do that with a narrow body plane
NEW DELHI :
InterGlobe Aviation Ltd, which runs India’s largest airline IndiGo, plunged to a record quarterly loss of ₹1,062 crore in the recently concluded September quarter as higher maintenance and overhaul costs outweighed the increase in passenger traffic. IndiGo’s chief executive officer Ronojoy Dutta said in an interview that the airline expects its unit revenue, or revenue per seat, to remain flattish during the ongoing quarter —after registering 5% growth each quarter during the past few quarters—due to the slowing economy and other factors. Edited excerpts:
IndiGo’s costs rose sharply during the September quarter.
We have started following a new accounting standard from Q2 (September quarter). The new accounting standard looks at our total foreign liabilities. If dollar gets stronger, we take a hit. Apart from this, shop visits (MRO visits) and pilot training led to a rise in costs during the quarter. In 2016, we had a lot of A320neo planes which were supposed to be delivered but didn’t get delivered. So, to make sure that we didn’t have any capacity shortfall, we extended leases of our A320ceo planes, about 100 of them, by four years. Typically, we return the aircraft in six years, with shop visits taking place every four years. As a result, the leases of these aircraft were extended to 8-10 years. So, we had to take the aircraft for a second shop visit. We expect this cost to incur only till 2021-22.
What steps have you taken to mitigate your pilot shortage issue?
We were always tight on pilots, and it was sort of straight-jacketing us in many ways. Typically in a month, we used to train about 20-25 pilots. Right now, we are churning out 50 captains every month, for the last couple of months. So, this has temporarily led to a spike in costs, which is expected to go away by June next year.
What’s the logic behind the recent codeshare agreement with Qatar Airways? Qatar Airways has also expressed interest to pick up stake in IndiGo in future.
We are looking at different points of focus around us. They are Istanbul, Doha, Singapore, Kuala Lumpur, Bangkok, and these are places we will have lots of flights into. So, we would need flights, from these destinations to (places) beyond, so we need a code-share agreement with other airlines. As for Qatar Airways’ interest to pick up stake in IndiGo, it’s up to them to decide. We are just in there for a codeshare.
Do you expect a reconciliation between IndiGo promoters?
At a certain point of time, the company was in some way involved (with the promoters’ spat). This was when we were looking at RPTs (related party transactions). Obviously, when we place orders, we needed to know about RPTs. However, the board has come up with a procedure to deal with RPTs, which all board members, and promoters, have agreed to. But, it (the promoter spat) currently has no impact whatsoever on the company. It’s business as usual at IndiGo.
Do you plan to continue expanding aggressively internationally?
We want to go to all major cities around us, which is about six hours away, since our aircraft can fly that range. During the last few months, we have added flights to Kuala Lumpur, Kuwait, Doha, China, among others. Eventually, we want to create corridors of connectivity. For instance, We want to connect China and Africa via India, Middle East and Malaysia via India. Why can’t I fly Chengdu-Mumbai-Nairobi? Why can’t I fly Kuwait-New Delhi-Kuala Lumpur? These markets can be connected through narrow-body planes. But, something like Tokyo-India-London would need a wide body plane. We are seriously working on our wide-body aircraft plans. We eventually want to fly to London, and we can’t do that with a narrow-body plane.
What are your domestic plans like?
We are not yet fully satisfied with the domestic market. There are still lots of room for growth with several new cities and towns yet to be connected to the (IndiGo) network. For instance, we don’t yet fly to Kanpur, Agra, and Leh, among others. We need to fly to all these cities. We also want to provide a lot of access to smaller cities (in India). Going ahead, IndiGo will give customers a lot of choice, between non-stop and other flights, while travelling between two cities. Along with that, we aim to remain profitable.
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