Indigo can grow capacity: Experts

Written by Shaheen Mansuri | Mumbai | Updated: Jan 28 2011, 05:12am hrs
Delhi-based low-cost carrier Indigo, which signed an ambitious deal with European aircraft manufacturer Airbus recently to buy 180 aircraft worth $15.6 billion (Rs 702,00 crore), is well positioned to grow its capacity at a time when competing airlines have not made such moves, say experts.

The Indian aviation sector, growing at a rate of 15% year on year, will need over 1,000 aircraft in the next 20 years, compared to 420 as of now.

Sushi Shyamal, partner infrastructure practice at Ernst & Young, said, Indigo has earlier ordered 100 aircraft and currently has a fleet of 34 aircraft with high utilisation levels. The airline has replicated the same strategy this time. He further said that though other carriers have placed aircraft orders with either Boeing or Airbus, none has placed this big an order.

While national carrier Air India has already placed orders for 111 aircraft, 63 from Boeing and 43 from Airbus, it still falls short of 69 aircraft when compared with Indigos recent gigantic order. The carrier had in 2009 and 2010 deferred deliveries as it was already reeling under huge debt of around Rs 16,000 crore plus losses of over Rs 5,000 crore. The carrier consistently made efforts to reduce expenses and streamline its existing fleet. The airline in 2010 had also floated tenders for its three aircraft to be given on lease. The national carrier is now implementing a 3-year revival plan which began in August 2009.

Similarly, the countrys largest private carrier Jet Airways has placed an order with Boeing for 29 B737s, deliveries of which will commence from 2012, and 10 B787 Dreamliners due for deliveries from 2015. The Naresh Goyal-led airline has also firmed up plans for 10 A330s to be taken on lease. Kingfisher Airlines which will receive approximately 67 aircraft between 2010-2016 from Airbus, has also not enhanced its fleet order of late. The carrier, which has a debt of over Rs 6,000 crore, is completely focussed on its debt recast plan which will increase its moratorium period and an interest reduction amongst other benefits.