IndiGo Confirms International Expansion Plans

Independent Indian carrier IndiGo Airlines has outlined the first stage of its international expansion confirming that new links to Bangkok, Dubai and Singapore will commence from September 1. The New Delhi-based carrier has come a long way since it inaugurated flights in August 2006 and has now overtaken its local rivals to become the largest domestic operator by traffic (see table below). The carrier now has bold plans to become one of the country’s top operators in the international market after placing a bumper order for up to 180 new aircraft at the start of this year, currently the largest ever commitment for new Airbus equipment.

IndiGo has now successfully completed the five years of trading necessary to secure an international licence and will commence its first international flights in the third quarter. It will initially introduce a daily link between New Delhi and Dubai from September 1, adding daily links to Bangkok from September 8 and Singapore from September 15. These will be followed by daily flights from Mumbai to Bangkok and Dubai from October 2, with discussions ongoing to potentially add Muscat and Singapore connections in the future.

As the table above shows, all these initial destinations are currently served, many by foreign operators and IndiGo plans to carve back some market share that has been lost over the past decades to international rivals. With a one type fleet of Airbus 320 models, the carrier will be able to keep its cost structure low, and it is likely to compete strongly on price. Its international growth will be targeted on two key markets South East Asia and the Middle East, serving a range of destinations within the five and a half hour average flight range of the A320. Singapore is a market that is just inside of this window but IndiGo is expected to use newly delivered A320s on its route from New Delhi. These are expected to be fitted with additional centre fuel tanks, boosting range and should enable the airline to offer a direct service without major load restrictions.

Other Indian airlines have already established strong links into the Middle East, most notably Air India Express, the low-cost subsidiary of the Indian national carrier, while international operators Air Arabia and flydubai are quickly expanding their activity in India, taking advantage of the huge migrant traffic to introduce more direct links to the region from some of India’s provincial cities. An estimated 14.47 million passengers flew between India and the Middle East during the year – the region holding the largest traffic share from India.

It is no surprise that New Delhi and Mumbai have been selected as the initial Indian destinations for its international expansion as they are its largest domestic markets, but it will mean that it will face tougher competition from local and foreign operators. As the table above shows, IndiGo's largest base is New Delhi, from where the company serves 20 domestic points with 337 weekly departures), while it offers 210 flights a week to 13 destinations from Mumbai, offering good feed into its international services. The airline is likely to mainly target Indian customers during the first phase of its international development.

There are still some limited opportunities to grow further in the country. However, with strong competition from Indian Airlines, Jet Airways, Kingfisher Airlines and SpiceJet over domestic skies and low yields in the home market, the international market is a much more attractive proposition for airlines like IndiGo.