Internationalisation will be an important focus for IndiGo’s growth strategy, says IndiGo’s CEO Pieter Elbers in an interview with Jagriti Chandra. He also speaks about the exciting phase aviation in India is witnessing post-COVID-19, his philosophy about aviation and its role in bridging cultures and how aviation has allowed him to experience India’s diverse cultures, languages and clothing ever since he moved from KLM last September. He also describes how the aviation outlook in India is different from that in the Netherlands.
What does the Air India order mean for the aviation sector?
It speaks to the growth, and the growth potential, of the Indian market and the confidence in that growth. [The development is] pretty much like IndiGo in 2019 [when it placed an order for 300 aircraft of the Airbus 320 family], which is well before my time, and I commend the promoters for that, that these decisions were taken with a belief and vision that India will grow and the role aviation will play in that growth.
Which is what IndiGo has been doing for the past 16 years. Internally, we call it giving wings to the nation. We welcomed a little short of 80 million customers in the calendar year 2022, and 22 million in the last quarter. We fly to 76 destinations in India, and soon that will be 78, connecting the various corners of this fast and diverse country, which speaks to the potential for India and IndiGo.
What does the order mean for IndiGo?
The market is growing and it has space enough for multiple airlines. If you compare India with other huge markets in the world — such as the U.S., China or Europe — as a total, all of them have multiple players and usually a few larger ones and a few contenders. I think India is also moving in that direction. India is moving to a situation where today, there will be two larger airlines in IndiGo and Air India Group, and other airlines will compete for their part of the pie. The phase that India is in is what other countries have already gone through in terms of consolidation and growth. That is why it is such an exciting time in Indian aviation —because it is growing fast.
As far as the Air India order is concerned, we draft our own course in terms of the order we placed in the past, which was based on our own vision and belief — and not led by what competitors were doing.
IndiGo and Air India together control nearly 75% of the aviation market, which means there is a sort of a duopoly in the industry. What then happens to the smaller airlines?
Some have announced plans to grow and develop for themselves. We believe there is space for multiple players, also more than two. But in the maturing of the market, I would say that it is in a natural stage of development.
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Has there been a course correction under you in IndiGo’s strategy for international operations?
I think I came at a time IndiGo was recovering from COVID-19. IndiGo has an impressive history of 16 years of growth, starting from Delhi to Guwahati to Imphal to what it is today. Before COVID-19, IndiGo was growing and growing, and then the pandemic changed everything for everyone. I came at the end of the summer last year in September, which was the moment of recovery and there was renewed confidence in the recovery of the market. We have launched a whole range of actions, and the result for the last quarter was very good, which speaks to the resilience and the agility of the company to move forward.
When it comes to international operations — it is clearly a part of our strategy. Our strategy has a couple of important cornerstones, which is to continue doing what has made IndiGo what it is today. These are the pillars IndiGo stands on — on-time performance, affordable fares and hassle-free and courteous service —these three pillars have made IndiGo what it is today. Ever since I joined IndiGo in September, I have emphasised that we need to get these pillars back, and I am glad that from November we are back to number one when it comes to on-time performance [or punctuality]. That is the basics of who we are. The success of IndiGo, and one of the important factors why customers decide to fly us, is that it is always on time.
But that is one foot of our strategy, and we need two legs to stand on, and we need to more and more develop the second leg. We do operate today across 26 international destinations out of a total of 102. We have added a few of them last year, including Ras al Khaimah, and we have announced some further expansions which we are going to do this year. We haven’t firmed up the exact schedule, but Nairobi and Jakarta will be part of these international expansions, and we are also reviewing some more. And of course, China, which has re-opened after being closed all this time, is obviously on our radar. Further internationalisation is a part of our strategy. This will be achieved partly by our own flights, and partly through some of the international co-operation we are having. We work with some foreign airlines that codeshare on our flights in the domestic space; seven of them also give us international exposure.
We have intensified our cooperation with Turkish Airlines, where beyond Istanbul we connect to 27 international destinations. This internationalisation has accelerated over the past months. It is an important part of the strategy for IndiGo, and I am happy to make some contribution to the strategy as we go forward.
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IndiGo’s is an entirely narrowbody fleet with single class configuration of only economy seats. Can you explain the decision to get Boeing 777 widebodies with business class on lease?
The origin of the Boeing 777 flights was due to global supply chain challenges, whereby for us there was a lot of demand in the markets and we were confronted with shortages [of engines and aircraft]. We have taken numerous steps to deal with that, such as the extension of leases, keeping some of the Current Engine Options [CEOs, which are the older version of new engine options, or NEOs] and also having temporary wet leases [where aircraft are leased along with its crew]. It is a temporary solution. It helps us to move forward, and it is a larger aircraft than what we had before. The operations with four aircraft for flights from Delhi to Istanbul started in February 1 and have been on for two weeks now.
How has your experience been with the business class on these aircraft? Are you testing waters before introducing widebodies and business class?
We still need to work on some of that part. We do have commercial cooperation with Turkish Airlines and the business class focus is on Turkish Airlines given their background and history. We also have the opportunity for our customers to experience that product and to connect in Istanbul to the rest of Europe. It is fantastic to see a share of these customers connecting after a six-hour flight from Delhi to Istanbul, followed by a one-hour flight from Istanbul to Athens or two hours from Istanbul to Venice which is a good proposition for our customers.
Are you considering looking at widebodies, and business class on international flights or will you continue to be an all-economy airline?
Our present model, which includes affordable fares, has served us very well. It is an important part of our strategy. In order to have those affordable fares, we put a lot of emphasis on cost leadership. That is the focus and core of our company and that will still provide in India a lot of opportunities to grow.
On widebodies, we have not taken any decision but we are not ruling out anything. But look at where we are: we have almost 500 aircraft still on order. We have the XLRs coming in 2024-2025, which will further extend the range. So, we are in no need to take any of that decisions. We have a huge order book, one of the largest in the world, and we have XLRs on order. With these two elements, we have no need to take any of the other decisions.
So, no rethink on XLRs?
No, there is no rethink. We have a couple of dozen on order, but we are awaiting the precise schedule for when the delivery is coming and we are discussing that with Airbus. That is likely between 2024-2025 and we are waiting the precise dates.
The Air India order also includes 70 widebodies and they are expanding rapidly on international routes. Are you happy allowing them to be an exclusive airline from India for ultra-long haul and long haul flights?
Ever since its creation in 2006, IndiGo has drafted its own course and taken its own decisions. The Air India order is official now, but it is not a surprise and there were months and months of speculation. This was imminent. It does not change the direction or the course for IndiGo. We are confident in the growth of the market, our product, our customer proposition. Customers are deciding where to fly and whom to fly, and it is our job to live up to those customer expectations.
Will you then be looking to wet lease more 777s, until you get a confirmation on the delivery timelines from Airbus?
The widebodies is a temporary solution to address supply chain issues. It is not a solution to XLR timing. XLRs will arrive, and once they do, we will accommodate them as part of our strategy.
Our present 321s in combination with the geographical position of India already gives us a lot of potential to further develop our international network. Within the existing range of 321s we have a lot of opportunities. Our plans for the financial year 2024 include Jakarta and Nairobi and more destinations. Nothing stops us today from executing our strategy when it comes to more international flying.
What is the current split between your international and domestic flights?
That depends on the measurement we use and whether that is the number of passengers or available seat kilometres or flights. Very generically, we are in the range of 20% available seat kilometres in international operations and lower if you look at passenger numbers — because we have a lot of short sectors where the number of passengers is lower but the available seat kilometres are higher.
Looking at where India is going and the economic development, international trades, foreign investments, some of the production developments and the ambitions of India when it comes to creating its own industries — further internationalisation will be met. Contrary to where I come from [KLM], there was one airport, one location and one hub. In India, we fly a different set of destinations — Delhi in the far north, Hyderabad in the south or Kolkata in the east. So, the geographical size of India and the scope of India, in combination with the network of IndiGo, which is strong in all these places, allows us to have a very rich international scope. We are not bound to do everything out of Delhi or Mumbai. We can, and we will also operate out of other places.
In your six months here what have you observed and liked or disliked about India?
I love the clothing [he laughs, sporting a sleeveless jacket]. It is very different. One of the observations is the vibrancy, the dynamism of the country, its demographic composition and its forward-looking approach — that tomorrow is going to be a better day. You see these translating in various plans, such as construction, building airports and internationalisation and taking the country forward. That spirit is something that is well connected to aviation —the enthusiasm for opening new flights or in opening new airports such as [the one in] Goa. The fact that a new airport opens in Goa and it is seen as a catalyst for future growth, economic development and prosperity is very important.
On a personal note, the enormous diversity of India is something one reads about. I have been to India multiple times prior to joining IndiGo mostly for business purposes. But when you are here and you start to discover, it is indeed true that every 50 km the language changes, food changes and that whole notion of diversity is great to experience. At the same time, the different elements are glued together under the Indian culture. And aviation, I believe, is almost philosophical; it acts as a bridge between people and culture that goes international, but it also goes domestic. In the country where I come from, aviation was very much international, because the country was small — north to south is 300 km and there are 17 million people. That’s probably 60% of the population of Delhi itself. And [in the Netherlands] it was connecting the country to the world, and the world to the country. Here it is connecting places within India. This is what we call internally, “giving wings to the nation”. For instance, on a recent visit to Imphal [IndiGo’s first flight in 2006 was to the city], I have seen what aviation has done for such a place and now we have numerous flights and developments. The role aviation is playing is of bridging cultures. Aviation is also a great way for me to experience the country’s diversity and the bridging of different cultures.
