With Tatas’ acquiring Air India, we’ll have responsible competition: IndiGo CEO

By the end of November, our capacity is back. It is higher than pre-Covid. So domestically, we’re moving along nicely in terms of load factors touching 86 per cent on certain days overall for the month, and about 79-80 per cent on the others. International is a problem because it is a higher margin business and used to be 25 per cent of our capacity, and international is only coming back slowly. So at this point, we are one-third of pre-Covid levels. But there is a line of sight as to when we get back to pre-Covid levels and some markets have opened up nicely. Doha, Dubai, and so forth. But in other markets like Saudi Arabia, Thailand and Singapore aren’t great. I'm hopeful that things will open up in December, so that's key to returning to profitability. International markets need to open up.

Oil prices really are a challenge and a huge pressure on the cost side. There are two ways we can be profitable now — A lot depends on the international or most optimistic scenario is that oil stays flat or goes down a little and international opens up and then we can think about profit. However, if it goes higher, we will be in deep pain.

Regarding the airfares, India has the lowest airfares in the world and it's not like a one-time phenomenon. However, we've seen some stabilisation in the last 3-4 months. But it needs to stay there for any of us to be profitable, and this has been a strong season. I'm hoping that it's not just a seasonal effect. We price airfares according to the demand. My cost is going up so much, so my price goes up too, it sort of follows our costs, but we're not passing it on... we’re trying to keep it at a reasonable level in order to absorb all our costs, including fuel.

I will distinguish between economically responsible competition and economically irresponsible competition. So irresponsible competition is when people are being funded by the taxpayer. Irresponsible competition is when people are just fighting for survival and cash flow, and they're not looking at profits.

Fortunately with Tata group acquiring Air India all that gets reversed. Now, we’ll have an economically responsible competition. Apart from the pricing issue, it's also good to have a strong ecosystem if we have two strong Indian airlines. I think we'll have a bigger, stronger ecosystem within India, which I think would be great for everyone.

Market share is a consequence of what we do and it's not our focus at all. In other markets too, smaller airlines have a good margin. Because we have a higher market share doesn’t mean we do not have profitability. We are looking to serve the customer and are focused on our mission of economic catalyst and national integration. So we added the flight Dimapur to Delhi, we got a lot of complimentary letters from customers and that flight is doing exceptionally well and is highly profitable too. As a result, the market share goes up, but that is not the focus.

Infrastructure really is the problem. In metro as well as smaller cities. The terminals aren’t connected, there isn’t enough parking space etc. The point is, government or private airports, we need a lot of attention to all the airports to improve our infrastructure, and it is affecting our growth plans.

We want to be present at all airports. We want to connect all the corners of India. We are very focused on the geopolitical aspects of being India's largest airline.

No, we are not players in the merger or consolidation game. I would also say we don't dominate any market, we participate in them. There's plenty of competition.

Right now we are comfortable. We don't want to change our frequency and have no plans to do so. Because this really is a long-term planning process. We have a good plan and order book. While we are taking deliveries we are also retiring aircraft, but right now it's ok. We still have to recover from the balance sheet dents.

We are not going to go away from the leasing model. We used to buy some when it was viable, we’ve also done sale-lease-back on them. At this point, the balance sheet has taken quite a battering, and we're trying to recover from that. But as we have a strong cash position, we would look at buying a few airplanes.

We took approvals just in case we needed to raise funds. We never had a need for the cash, hence we didn't really want to dilute our shareholders unnecessarily, but we kept it as disaster insurance. As the revenue picture improves rapidly we don't see the need now.

We have taken on debt from Indian banks. We are hoping for our cash flows to improve so that we can start repaying but we’re comfortable at the moment.

I'd say the worst is way behind us. They both have a mutual agreement in the well-being of the airline now. There were all these issues about SEBI, related party transactions. All that has been put to bed. So I think you know this story is history.

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