IndiGo says economic slowdown has hit travel demand

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Published: October 25, 2019 2:44 AM

The capacity addition at the Gurgaon-based carrier has come down to three aircraft per month from an average of six aircraft due to supply constraints.

Domestic traffic has grown 3% y-o-y in calendar year 2019 due to huge reduction in capacity by grounding of Jet Airways.

Budget carrier IndiGo on Thursday said that the economic slowdown has impacted the travel demand during the ongoing festival.
CEO Ronojoy Dutta said airlines are resorting to flash sales to increase their cash flows.

“Looking at the Diwali experience, the softness in demand is an economic issue. July and August were strong months since Jet Airways went out of the market. The weakness started in September which could have been a seasonal thing. But the situation hasn’t improved in October. Two of our competitors came out with sales in October which is unusual during the festival season,” Dutta said on the post-earnings call.

Low-cost carrier GoAir and full-service carrier Vistara launched sales earlier this month.“At this time we are expecting a flattish year-over-year unit revenue performance,” Dutta pointed out.Domestic traffic has grown 3% y-o-y in calendar year 2019 due to huge reduction in capacity by grounding of Jet Airways.

Meanwhile, IndiGo has lowered its capacity growth guidance for FY20 from 30% y-o-y to 25% y-o-y due to delay in delivery of new aircraft from manufacturer Airbus. The capacity addition at the Gurgaon-based carrier has come down to three aircraft per month from an average of six aircraft due to supply constraints.

“This is beyond our control. We want to add planes quickly. Airbus is struggling to keep pace with the deliveries due to supply chain problems. It could take 3-6 months to catch up with the deliveries,” Dutta said.

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