Indigo flight (File)
Indigo-Airbus has become the biggest deal in aviation history. After this order, many questions have also started floating in front. Firstly, why did this deal become necessary for Indigo? How does this deal matter for India and the Indian aviation industry? Will Indian Air be able to make the deal feel good for passengers? In such a situation, today there is a need to open many pages behind this deal and there is also a need to understand them because ever since GoFirst was grounded, the common people have suffered the most. It is becoming difficult for common people to afford air fare. In such a situation, there is a great need to understand what kind of changes can be seen in the Indian aviation sector in the next 7 years. Because two months from now, the country’s largest business group Tata has ordered 470 aircraft for its aviation arm Air India, which was earlier the biggest deal in this sector.
Today we have set another truly momentous and very exciting step in the journey of IndiGo as we placed a firm order for 500 Airbus of the A320 Family. This is the largest-ever single aircraft purchase by any airline with @Airbus, #goIndiGo pic.twitter.com/8ix3TSivIT
— IndiGo (@IndiGo6E) June 19, 2023
Why was this deal necessary for Indigo?
First of all, the company does the talking, why did this deal become necessary for Indigo? Indeed Indigo is thinking far ahead. At present there are 300 aircraft after that. Whose retirement is going to happen in the year 2030. In such a situation, he would have needed more aircraft for the coming times. On the other hand, the airline wants that by the year 2030, it should have more than 700 such aircraft so that it can fly continuously. At present, its market share in India should not only remain intact but also increase in it. In such a situation, by the financial year 2024, the company is going to include 50 aircraft in its fleet.
On the other hand, the company did not want any kind of hindrance in the supply chain and from time to time new aircraft were added to its fleet. Because of this, apart from his earlier order, he ordered 500 more aircraft so that some pressure is created on the aircraft manufacturing company as well that the company’s order has to be completed as soon as possible. Along with this, the big benefits of big orders are also such that the company also benefits financially. In fact, in small orders, the scope of discount is little or no, but in large orders, the discount is also huge. The same is being seen with the Indigo Airbus deal. Even though this deal is being said to be worth 50 billion dollars, but its actual price can be reduced by about 35 to 45 percent.
On the other hand, if you look at another aspect, at present, Indigo Airline had made more than 86 million passengers travel by air in the financial year 2023. It can reach 100 million by the end of March 2024. If the aircraft will be less, then there may be a decline in its market sharing and it may have to face criticism in the coming days. At the same time, in the year 2021, it has been one of the third most punctual airlines in the world. In such a situation, she wants to maintain this image of her in the world. This is the reason why it is busy in increasing its fleet.
The company’s ambition to expand its international reach has helped seal the deal. For this, the airline is working on a separate deal for widebody aircraft, in which 25 aircraft can be purchased from both Airbus and Boeing. Through a codeshare system with Turkish Airlines, IndiGo is providing connectivity to 33 European destinations which include countries like Bulgaria, Spain, Netherlands, Greece, Belgium, Hungary, Denmark, Republic of Ireland, UK, Malta, France, Czech Republic, etc. Republic, Israel, Austria, Switzerland, Italy, Portugal and Edinburgh are included. Indigo has increased its international passengers market share among Indian airlines from 31 per cent in April 2022 to 37 per cent in April 2023. Indigo is expected to add 174 new weekly international flights between June 2023 and September 2023, including new destinations, routes and frequencies.
Why was this deal necessary for India?
Even though Air India had signed a deal for 470 aircraft in the month of March, but that deal would prove to be insufficient for the Indian aviation sector in the days to come. One of the reasons for this is the rapid growth of the Indian market. In the last few months, we all have seen how the number of air passengers is continuously increasing in the country. In the month of May, there has been an increase of 15 percent in air passenger traffic on year-on-year basis and the number of passengers traffic has reached 132.67 lakhs. A year ago this number was 114.67 lakh.
On the other hand, in the month of May the country saw the circumstances of failure of Go First. Because of which the demand increased in comparison to the supply in the country and the airlines had to increase their fares. Aircraft fell short to fill the routes of an airline with 7 per cent market sharing. Even after having all the airlines like Air India, SpiceJet, Air Asia, Vistara, Akasa in the country, the sector had to face a lot of trouble, in such a situation, this deal of Indigo became very important for India.
Will air passengers end the pain?
The biggest question is whether this deal will be able to complete the air travel of crores of people, who are currently unable to complete it due to air fare. Yes, after GoFirst was grounded, the increase in domestic air fares of India was really shocking. After that the Balasore train accident added fuel to the fire. The fare for going from Delhi to Patna, Mumbai, Lucknow, Srinagar, Goa, Bangalore had increased by 70 to 100 percent. The rent which was between 5 to 10 thousand has reached 10 to 15 and even 20 thousand. Now that the Indigo deal has been done after Air India, in the coming days, with the increase in the availability of aircraft and the number of passengers, the affordability of fares will also increase.