The country?s largest carrier by passengers, IndiGo, has posted a fifth straight year of profits. After a shaky 2011-12 when the carrier had to depend on deferred tax assets to report a R128 crore profit, low-cost carrier swung to a R787 crore profit in the 2012-13 fiscal. The airline also reported a 65% increase in revenues at R9,458 crore, against R5,718 crore in 2011-12.

The airline?s president Aditya Ghosh spoke to Debabrata Das to discuss current operations and future plans. Edited excerpts:

The results improved significantly in 2012-13 compared to the previous year. What changed in the industry and what helped you achieve this growth?

We improved because of an increase in our capacity which was 39% higher in 2012-13, compared with the previous fiscal. Coupled with this increase in capacity was the better yields in the industry during the last fiscal. In 2011-12, the atmosphere was completely different. There was an intense competition with fares being dropped irrationally, which ultimately led to one airline shutting down. This was not the case in 2012-13 and the yields were much better.

Fare wars did return in the early part of this year. Are you happy with the current level of fares in the industry?

Well I?m both happy and unhappy. While fares look high, they are mostly because of various charges, like airport development fees and taxes. The cost of the travelling passenger is going up but none of the airlines are benefiting. In a situation where the rupee is weak and aviation turbine fuel costs are rising, airlines aren?t really getting the advantage of the current level of high fares.

IndiGo has been expanding at the pace of one airline a month till now. What about the short term expansion plans of the airline?s fleet?

We were at 55 planes in March 2012 and ended at 66 in March 2013. By the end of the current fiscal we should be at 75 planes. So we are growing roughly at around 10 planes a year from now on. We will continue with a mixed model of ownership wherein 89% of our planes are leased and the rest are owned.

Where will you be deploying this additional capacity?

We are an Indian domestic carrier and we would continue to remain so. Right now about 10% of our capacity is on international duty, which we will continue to maintain. The plan is that as and when additional planes come in, we deploy them on the existing international destinations but connect new Indian cities. For example, we already connect Delhi and Bangkok, we will now connect Kolkata and Bangkok, too. It is our intention to connect as many tier II and tier III cities as possible with the Airbus A320.

Is there a fear that the two new start-up airlines will create a ?blood-bath? in terms of fares in the market?

There is absolutely no chance of that. The market is very big and there is enough space for new players to come in. Currently the size is nearly 62 million but it is estimated to grow to 107 million in the next 40 months. That means nearly a million passengers will be added every month. So clearly there is enough space for new entrants. But they will have to get the right cost base for their operations to take advantage of this growing market.

Seeing the airline?s expansion, would there be a need for an IPO?

No. There are no such need. Airlines who need funding are the ones with a high debt and weak cash flows. We are a debt free airline with very positive cash flows. So there?s no need for any sort of fund raising. Our cashflows will take care of our expansion.