IndiGo plans new product for business fliers, posts profit beat

IndiGo announced plans to launch a premium product within months to woo India’s first-time business travelers after announcing a quarterly profit that beat analysts’ forecast. 

The country’s biggest airline will introduce a “tailor-made” product for India’s “busiest and business routes” by the end of the year, it said in a filing Thursday. The product is aimed at those who want to “travel business, perhaps for the first time in their lives,” Indigo said, adding that it will release details about the premium offering and routes in August. 

The announcement underscores the low-cost carrier’s ambitions to pivot beyond its no-frill offerings and tap high-paying fliers among the country’s growing aspirational class. It’s also gearing to become a long-haul carrier, moving beyond its specialization in short-haul trips that has underpinned its growth. 

Those ambitions got a boost by a larger-than-expected quarterly profit. Net income almost doubled to 18.9 billion rupees ($227 million) in the three months ended March 31 from a year earlier, topping an average analysts estimate of 11.99 billion rupees.

This is the sixth straight quarterly profit posted by the airline, boosted by a 14.4% rise in seat capacity.

Revenue surged 26% from a year earlier to 178.3 billion rupees, also beating estimates. Total costs rose 22% to 167.4 billion rupees during the period, while fuel costs advanced 6.6%. Load factor — which measures the utilization of available seat capacity — was at 86.3% versus 84.2% in the same period last year.

Ramping Up

Indigo plans to buy as many as 100 Airbus SE A350 widebody aircraft in a move that will pit it against Tata Group-owned Air India Ltd., which is also expanding its own fleet and currently operates the highest number of non-stop flights to the US and Europe from India.

IndiGo, which already dominates the domestic travel market, has also placed an order for 500 narrowbody planes to preserve its lead in the domestic market. The airline is looking to further boost capacity, targeting a 10% to 12% increase in the June quarter from a year earlier, it said in the Thursday statement.

IndiGo flew 23.6 million passengers between January and March, up 12% from a year earlier, according to the country’s aviation regulator.

While IndiGo’s aircraft purchases will aid its capacity expansion plans, it is also extending plane leases and using wet leases — leasing a jet along with crew — after inspections of Pratt & Whitney GTF engines grounded more than 70 of its aircraft.