Budget carrier IndiGo is fast filling the gap in capacity between India and the Middle East following the bankruptcy of market leader Jet Airways. IndiGo’s increasing fleet capacity and acquisition of many of Jet Airways’ slots to the region has made it the prime beneficiary of Jet’s grounding in mid-April.
At its peak controlling a 33 percent market share to the region, Jet carried the maximum number of passengers under bilateral traffic agreements, while Indian and Middle Eastern carriers shared the rest, according to the Directorate General of Civil Aviation statistics. IndiGo now has scheduled 237 flights to the Middle East starting this month.
Now flying a fleet consisting of 235 aircraft, IndiGo calls itself the “fastest growing airline in the world” and recorded a 44 percent increase in revenue from operations for the second quarter compared with the same period last year.
IndiGo chief commercial officer William Boulter confirmed to AIN a focus on expanding to the Middle East as part of the airline’s growth strategy and the positive effect of Jet Airways’ failure on profits this quarter. IndiGo has already secured additional rights to fly to destinations including Kuwait and Jeddah. “Jeddah, being the commercial capital and the gateway for the Haj; Dammam, being the growth center in Saudi Arabia; and Abu Dhabi in UAE...[these] are critical markets for strengthening our presence in the Middle-East,” added Boulter.
While sudden capacity contraction has resulted in increased fares, demand between India and the Middle East in trade and tourism continues to rise, driving many airlines to introduce new routes and additional flights to reverse the trend. “We have observed a rise in competition with a number of airlines entering the Middle Eastern market,” confirmed Boulter.
The sudden boost in capacity has raised concerns over a fare war as seen in the domestic Indian skies for the past two years. “More airlines result in additional flights, flexibility, and choices for passengers, which ultimately serves in pushing the demand up through competitive fares and better services,” said Boulter.
Santosh Hiredesai, research analyst at Mumbai-based SBICAP Securities, sees no reason to panic on fares hitting rock bottom as yet, however. “Bilateral rights to fly to the Middle East are limited and the Indian government seems in no hurry to distributing them...Expect another year for price wars to start,” he concluded.