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InterGlobe Aviation, the parent company of India’s largest airline IndiGo, recently gained board clearance to purchase 500 Airbus A320 Neo family aircraft for $50 billion at the most recent Airbus list cost. IndiGo’s new acquisition comes as it nears the completion of its earlier order of 830 Airbus A320-family planes, solidifying its position as one of the acclaimed European group’s powerful customers.
IndiGo, the country’s largest airline by market share, has placed a firm order for 500 A320 Family planes, marking the largest single purchase agreement in commercial aviation history. According to an official announcement, IndiGo’s total number of Airbus aircraft on order now stands at 1,330, making the firm the world’s largest A320 Family client. Because substantial discounts are frequently granted for such large orders, the actual cost of the order is accepted to be much lower.
This deal will surpass Air India’s previous record-breaking purchase of 470 planes in March, making it the largest in aviation history. The pact might help IndiGo assure a steady supply of new aircraft for the next decade, supporting its fleet expansion plans. IndiGo, which controls 56% of the domestic Indian market, has used its massive fleet to build new routes, garnering a disproportionate market share while competitors battled. The A320 Neo series consists of the A320Neo, A321Neo, and A321 XLR aircraft, all of which are noted for their revolutionary features and efficiency.
Following the Covid situation, airlines have placed additional aircraft orders, causing Airbus and Boeing’s order books to fill up. However, a global disruption in the supply chain has caused new aircraft manufacturing delays, causing airlines to postpone A320Neo deliveries till the end of the decade. This model has been chosen as the most sought single-aisle aircraft. IndiGo now services 75 foreign city pairings from 26 different places across the world. IndiGo CEO Pieter Elbers stated that the airline intends to expand its foreign seat share from 23% in FY 23 to 30% over the next two years.
In addition, the Indian airline is actively working on a second acquisition of widebody aircraft, with Airbus and Boeing bidding for a potential transaction involving approximately 25 aircraft. While negotiations are still underway, Boeing’s highly regarded 787 Dreamliner may provide them an advantage in securing the contract. Airbus and Boeing have secured billions of dollars in new contracts beyond 2030, ensuring future supply in the face of potential shortages. While competing with a reborn Air India under the Tata group, IndiGo believes its superior cost-efficiency strategy will keep it ahead of competitors as the Indian aviation sector consolidates.
Preparing for the future
According to a source, IndiGo intends to keep its fleet size consistent because it plans to retire approximately 100 aircraft by 2030, necessitating the purchase of new planes to maintain the goal fleet size of over 700. According to the airline’s Chief Financial Officer, Gaurav Negi, the airline expects to hire 5,000 personnel and add up to 50 aircraft by FY24.
Strive to fill deficiencies in their home country
IndiGo’s domestic market share increased from 54.9 percent in December to 61.4 percent in May, according to DGCA data, while GoFirst’s share plummeted from 7.5% to 0.4%. GoFirst’s market share decline can be attributed to the company’s recent bankruptcy in an industry where long-term survival is typically difficult. From EastWest and Damania in the 1990s to MDLR, Paramount, Kingfisher, Air Costa, and Jet in the last decade, the list of defunct Indian airlines is endless.
GoFirst has blamed its financial problems on Pratt & Whitney engine problems, which it claims prompted the grounding of more than half of its Airbus A320neo fleet. IndiGo also has issues with P&W engines. However, its CEO indicated that numerous mitigation measures had been put in place. IndiGo has maintained its dominance in Indian skies by filling the void left by GoFirst.
IndiGo giving Some hopes for International goals
IndiGo will expand its fleet with more widebody planes, demonstrating its worldwide ambitions. The airline appears to be discussing a separate purchase of widebody aircraft, with Airbus and Boeing Co. competing for a contract comprising approximately 25 aircraft. Through a codeshare agreement with Turkish Airlines, IndiGo connects to 33 European destinations, including Spain, Bulgaria, the Netherlands, Greece, Belgium, Hungary, Denmark, the United Kingdom, the Republic of Ireland, Malta, France, Austria, Israel, Switzerland, Italy, Portugal, the Czech Republic, and Edinburgh.
To meet global demand, Civil Aviation Minister Jyotiraditya Scindia requested local carriers to go further and introduce wide-body planes in May. The civil aviation ministry is already working with Delhi Airport, IndiGo, and Air India to make the airport a global civil aviation center. Because Indian carriers do not have enough wide-body planes to operate direct services on long-distance routes, most Indian customers must take connecting flights to a variety of worldwide destinations.
IndiGo’s share of the Indian airline’s foreign passenger market increased to 37% in April 2023, up from 31% in April 2022. IndiGo aims to add 174 new weekly international flights between June 2023 and September 2023, including new cities, routes, and frequencies.
Celebrating India’s rise, it is one of the world’s fastest-growing civil aviation markets, with 220 airports planned by 2024-25.