Q/ Considering the hopes of a post-pandemic boom, though tempered with worries over a spike in infections, how do you see the prospects for the industry in the near-to-medium-term future?
A/ The pandemic has impacted the aviation industry for much longer than expected. But the silver lining is that the demand for travel has strengthened over the past two years. We have noticed that the impact of the waves on passenger traffic has gradually been decreasing. For instance, in the first wave, the traffic was down to zero for the first two months due to government restrictions. During the second wave, traffic was down to 20 per cent at the rock bottom in May. During the third wave, traffic was down to 50 per cent, owing to better vaccination rates and huge pent-up demand for travel.
We have witnessed a steady recovery in the periods between the waves and this is the first summer after two years with high demand for vacations. Furthermore, the opening of scheduled commercial international operations has generated strong interest in international travel and holidays. IndiGo is well poised to benefit from the demand surge by offering connections to 73 domestic and 24 international destinations. IndiGo is hoping to reach pre-Covid traffic by the second quarter of this year.
Q/ IndiGo has only grown in strength despite the lull. How did you make it happen? How do you plan to consolidate it?
A/ We focused on coming out stronger on the other side of the pandemic. In order to do that we made our operations more efficient, be it through replacing Airbus A320 CEO aircraft with the fuel-efficient NEOs, renegotiating our contracts with the suppliers or providing a higher level of service to our customers. We continue to work towards a return to profitability to strengthen our balance sheet. With a modern fleet, dedicated employees, and a stronger economic environment we are well-positioned to leverage all the growth opportunities around us.
Q/ Fifty-nine per cent is too big a market share to hold on to, especially with old and new rivals nipping at the heels.
A/ India continues to develop as one of the world’s largest civil aviation markets, as it ramps up capabilities and capacity in infrastructure and services. Currently only (a small percentage) of the population travels by air. There is a huge potential to deepen the penetration of air travel by enhancing accessibility and providing affordable fares. And this is our focus right now. We will keep expanding our network and stay true to our promise of affordable fares, hassle-free service, and on-time performance to catalyse the transition from rail travel to air travel.
Q/ Fuel prices remain the elephant in the room. How can cost-efficiency be maintained, particularly if ATF prizes see-saw or spiral up further?
A/ Just when we thought we are out of the third wave and traffic started picking up, the situation in Europe led to high fuel costs, eating into our already thin margins. Over the past few weeks, crude oil prices have soared to a seven-year high nearing $140 a barrel. This has resulted in over 50 per cent ATF price hike from January 2022 till date. ATF constitutes over 45 per cent of our operational costs.
We have been in talks with the government to bring ATF under GST, as it brings the benefit of input tax credit. We believe that such measures are needed now more than ever to offset this increase in cost and make flying viable for airlines and affordable for consumers. A rationalisation of taxes will result in relief for the sector, spurring growth and creating a multiplier effect throughout the economy, promoting trade, tourism and job creation.