Flyers are back, fares are holding strong, and corporates are again travelling for business trips — India’s largest airline IndiGo’s management showed signs of strong optimism even though the company posted a loss of Rs 1,435.70 crore in the September quarter, primarily hit by rising crude oil.
While the losses were up 20 per cent against Rs 1,194.80 crore in the year-ago quarter, the airline has managed to reign in the cash burn. It said passengers were willing to pay more leading to a strong growth in yield. However, a return to profitability may not be in near term as high fuel
prices overshadowing the strong demand pose a threat to a recovery in the pandemic-battered aviation industry.
For IndiGo, fuel
costs in the quarter spiked 207.8 per cent against Rs 1,989.4 crore in the year-ago period, as global crude oil prices soared over the past few months. Even other costs, excluding fuel, rose by 46.6 per cent YoY to Rs 5,245 crore.
“We are encouraged by the booking trends in October. Average daily revenue from passenger booking in October is somewhere seen during January 2020. For October load factor will be above 70 per cent. It’s time to heal after the damage,” IndiGo
Chief Executive Ronojoy Dutta told analysts on a post results earnings call.
The airline will also increase capacity in the October-December period by 40 per cent compared to last quarter as the government has removed the restriction on capacity deployment by airlines. For October, IndiGo’s aircraft on an average is 70 per cent full as people are flying more during the festive season.
They are ready to even pay higher price as shown from IndiGo’s passenger yield or average fare per passenger mile, which is at Rs 4.19 against Rs 3.83 during the similar period last year. Dutta said he expected the fares to stay high as it was unlikely that any airline would significantly increase capacity while demand stays strong. The Directorate General of Civil Aviation has approved 22,287 weekly domestic flights of Indian carriers for the winter schedule of 2021. The number is 4 per cent less than the 21,307 weekly flights approved for the winter schedule of 2019.
The airline said it was noticing a trend of return of business travel after a long hiatus as the Covid-19 pandemic forced corporates to do their meetings online.
“We have seen 50 per cent recovery in business travel. People have started taking group travel from the corporate side which is encouraging,” said Sanjay Kumar, IndiGo’s chief strategy and revenue officer. He said that during pre-Covid days, 24 per cent of IndiGo’s overall traffic were corporate travelers.
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