IndiGo bets big on Indian travel boom with record Airbus deal

IndiGo placed a record-breaking order with Airbus SE for 500 narrowbody aircraft, making a bold bet well into the next decade on an undiminished travel boom in the world’s most populous country. 

India’s dominant carrier announced the deal at the Paris Air Show, giving Airbus an early win on the first day of the event while rival Boeing Co. stood on the sidelines. IndiGo will take delivery of the aircraft between 2030 and 2035, most likely mixing its fleet between the smaller A320neo and the larger A321neo type, Chief Executive Officer Pieter Elbers said. 

“This is the right time for us to place this,” Elbers told a packed press conference at the air show, flanked by Airbus CEO Guillaume Faury and other executives from both companies. “No one has ever ordered an order of this magnitude.”

The outsized deal eclipses a purchase only a few months ago by Air India for 470 aircraft from Airbus and Boeing and brings IndiGo’s order backlog to close to 1,000 planes. Indian carriers are stocking up on aircraft to handle increasing volumes in the world’s fastest-growing major aviation market. Elbers said he’s confident the demand is there to absorb such a massive expansion in capacity as an increasingly mobile Indian middle class discovers air travel.

In the space of less than two decades, IndiGo has gone from a startup to the country’s dominant carrier, with a market share exceeding 60%. Air India is also trying to capture some of the market potential, having reinvented itself under new ownership and a fleet purchase plan that underscores its ambition. Akasa, which began flying last year, also wants to elbow its way in — it’s working to secure financing for a follow-on order with Airbus, Bloomberg reported earlier.

The Indian aviation market is hard-fought, making margins razor thin and leaving little room for error. GoAir filed for insolvency earlier this year, blaming durability issues with the engines on its A320 fleet. 

Airbus Lead

For Airbus, the deal cements its growing command of the crucial single-aisle space, the most widely flown aircraft category. Airbus will have 10 final assembly lines for its A320 family jets by 2026 after adding a second line in China. Faury said he doesn’t foresee production issues delaying deliveries to IndiGo because Airbus plans to eventually raise output to 75 monthly units. 

There’s no plan to add a final assembly line in India, Faury said. 

IndiGo, already the world’s biggest customer for A320neo jets, has bold expansion plans. The airline expects to double in “size and scale” by the end of decade and plans to increase operations in Central Asia. 

The fleet expansion also aids India’s ambition to become a connecting hub. The government has been encouraging airlines to operate more long-haul aircraft while it plows $12 billion into airport buildout. 

India, having recently surpassed China as the world’s most-populous nation, offers airlines huge growth potential with a budding contingent of first-time fliers. Airbus in June predicted that aviation’s “center of gravity” will shift toward Asia, with China and India driving growth. 

“Indigo has been a fantastic opportunity for Indian people to fly for the first time,” Faury said, calling IndiGo “the airline of reference” for the Indian market.