India’s largest and most successful domestic airline IndiGo’s announcement of a spectacular order for 250 Airbus Group SE A320 aircraft for a total of $26.6 billion could be designed to enhance its image before investors prior to its proposed IPO. The company expects to garner Rs 2,500 crore from this IPO which could come next year.
The carrier hardly needs this image booster as it carries an incredible 38 per cent of India’s 73 million travelling public and it has economy of scale and scope, resulting in a low seat-mile cost. It has a fleet of just 97 aircraft though it had since 2006 announced orders for a total of 250 aircraft before the latest order.
Its founders, Rahul Bhatia and Rakesh Gangwal, come with an enviable record, with Mr Bhatia having a rich history in the travel industry and Mr Gangwal in the aviation space in the US. He was chief of US Airways.
The secret of their success is the model of buying where the carrier sells its new aircraft to a leasing company and then leases the same aircraft. How many aircraft the company will finally have in its fleet after the spectacular order announcements over the years is anybody’s guess.
It, however, remains the only airline that is well equipped to handle increased traffic in the coming years and is profitable. The government’s proposed new aviation policy, expected by October, envisages taking air travel to the masses and developing 100 regional airports.
