Unprecedented capacity expansion by Indian carriers to match the aggressive growth agenda of IndiGo would push airlines towards reduced profits and larger losses in FY2018 due to pressure on yields on account of offer of low fares, Centre for Asia Pacific Aviation (CAPA), the aviation think tank has said.
“IndiGo’s increasingly aggressive and unprecedented growth is creating a strategic compulsion for others to expand to remain relevant in the market. This is driving over-capacity and increasing industry risks for most carriers,” CAPA said in its outlook for 2018.
IndiGo has the largest fleet of 135 aircraft, and the largest order book of any airline in the world at 458 aircraft. Its fleet could expand by 46 aircraft during this financial year.
Besides, the airline has announced an order for 50 ATR-72s and possibility order A330neos for long haul services.
“Other carriers are responding by accelerating their own expansion to hold on to market share and to prevent IndiGo from securing a dominant position with over 50% of the market,”Kapil Kaul, CEO, South Asia, CAPA said.
This expansion will place immense pressure on the aviation system.
Of the expected 1080 aircraft on order, more than 700 are scheduled for delivery within the next decade and 400 within the next five years. This excludes orders yet to be placed and equipment to be taken on lease.
