New Delhi IndiGo, the country’s largest airline, has reached “pre-COVID levels in terms of the number of international flights operated”- which include international departures - despite operations in three countries, namely China, Myanmar and Hong Kong yet to restart.
The carrier saw a pickup in its operations to West Asian countries and will start operations to Bahrain and Ras Al Khaimah as well, the company’s CEO, Ronojoy Dutta said during a post results analysts call.
According to him, recovery in the internation business has been “strong” and the company remains optimistic. International business is also catching up nicely in terms of strength.
“So we’ve added every station we had pre-Covid except for China, Myanmar and Hong Kong. So if we look at the total number of departures, we will be back at pre-Covid levels,” he said during the call.
The airline will also add two freight planes by October 2022 to increase its cargo operations.
Domestic market Outlook
According to Dutta, the airline is expecting its performance in Q2FY23 – July to September period – to be impacted because of “weak seasonality”. He anticipated a decline in revenue sequentially (Q2FY23 vs Q1FY23) but an improvement in numbers year-on-year.
According to him, there is also no evidence of revenue weakness in the July-September quarter apart from seasonality.
Corporate travel “has come back” and domestic lesiure travel continues to be strong. However, while there has been a small loss in passenger load factors due to higher ticket prices, Dutta is hopeful of passengers returning as “they get used to new fares”.
The fare increase was caused by a combination of high cost and rising ATF prices. Crack speed – a measure of difference between crude and ATF prices had increased significantly in the last six months.
IndiGo said for the June quarter its fuel costs were up nearly 100 per cent, y-o-y.
“Ticket price in India was abnormally low and have now stabilised in the past one year and. we don’t see resistance in corporate and domestic travel” he said adding that yields of domestic carriers will only improve as fares get back to pre-Covid levels.
No Impact of competition
Dutta during the earnings call said, rising competition from new airlines were unlike to have a significant impact on its profitability.
While capacity deployment by one carrier was low leading to advantages for IndiGo; Indian carriers have also not behaved irrationally on fares.
Another competing airlines, he said, was focussing on international routes and looking at expansion there.
Moreover, other Indian carriers were unlikely to match prices by IndiGo as its operating efficiencies was fairly high.
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