IndiGo ticket prices may soon get cheaper: Here's why
IndiGo airline is reportedly mulling separating its baggage charges from its air ticket in an attempt to position itself as an ultra-low-cost air carrier. The unbundling of baggage charges from air tickets will make ticket prices cheaper. Notably, IndiGo had not implemented the unbundling of fares in February despite India's Directorate General of Civil Aviation's nod for the same.
Why does it matter?
The move comes as IndiGo is expecting a potentially fierce price war in India's domestic air travel market. It also takes precedence as the aviation market is showing signs of recovery following the worst COVID-19 outbreak. However, driving down costs could prove counter-productive as airlines may end up barely covering costs. Such tactics have put airlines out of business in the past.
IndiGo in talks with government
In February, DGCA had allowed domestic airlines to give concessions in ticket prices to passengers who carry no baggage or only cabin baggage. IndiGo could not take a decision at the time due to COVID-19-induced regulatory caps on fares and capacity, CEO Ronojoy Dutta told Bloomberg. IndiGo is in talks with the government and is waiting for "everything to settle down," Dutta said.
Revenue coming back, says CEO
With the improvement in India's COVID-19 situation and domestic airlines operating at 100% pre-pandemic capacity, the aviation sector is witnessing a sharp recovery. To cover its losses during the pandemic, IndiGo was planning to raise funds through a share sale to institutional investors. However, Dutta said it is "unlikely" now "because of no third wave, and revenue is coming back."
IndiGo to operate international flight in seven-hour range
Even though IndiGo had long been planning to operate wide-body aircraft to destinations such as London, Dutta said it had no plans to fly on such routes. However, the airline will operate international flights in the seven-hour range where there are not enough non-stop flights. These destinations include Moscow, Cairo, Tel Aviv, Nairobi, Bali, Beijing, and Manila.
40% flights to be international in 5 years
IndiGo would expand its international routes faster than domestic ones, Dutta said. The move is aimed at benefiting from the rise in international traffic through India. In five years, the airline's capacity on international routes will be raised from 25% to 40%.
Ultra low-cost market gets crowded
Dutta said India's low-cost carrier market would become crowded with the entry of Rakesh Jhunjhunwala-backed Akasa Air. Air India—being sold to TATA Group—and Vistara have "little space to themselves, which is good, and they're separated from us" as both are full-service carriers, Dutta said. Full-service carriers are different from low-cost carriers in multiple aspects, including price structure and facilities.
