How IndiGo is taking the fight to Air India's doorsteps

“Outside India, much fewer people knew the company,” Elbers says. “At that time, I was jokingly saying, ‘I’m going to an airline twice the size in customers as KLM’.” However, the awareness of IndiGo outside India was limited because it was mostly a domestic operator. Analysts and industry followers knew it, but the rest not so much.”

That is also perhaps why, since he took the corner office at IndiGo in September 2022, Elbers has turned much of the airline’s attention to international operations, after nearly decimating competition in the domestic market over the past two decades. From starting new international routes from its hubs in New Delhi and Mumbai to embarking on an aircraft purchasing spree and acquiring long-haul and wide-bodied aircraft, IndiGo is now reinventing itself for an India that is expected to remain the world’s fastest growing large economy.

In 2023, IndiGo beat the 93-year-old Air India to what can now safely be called the mother of all aviation deals when it ordered as many as 500 aircraft from the France-headquartered Airbus. Today, IndiGo has more than 900 aircraft on order with Airbus, while Air India is waiting to take delivery of 570 aircraft.

“I’m more of a believer in evolution than revolution,” Elbers says about IndiGo’s new direction. “The market is evolving, and in that evolution, given the scale of the country, the opportunity is massive.”

This year, the airline has begun operations to Krabi, Manchester, Seychelles, and Fujairah, and is expected to launch direct flights to Athens, Rome, Venice, Seoul and Tokyo next year.

Going big globally

Elbers had joined IndiGo, India’s largest airline by market share, in 2022, almost a year after Air India, once the country’s flag carrier, was bought by the salt-to-steel conglomerate Tata Group for Rs18,000 crore. Air India was founded by JRD Tata, former chairman of the Tata Group, before the government took control of the airline in 1953.

A few months after Air India returned to the Tata fold, the group appointed Campbell Wilson, former CEO of Singapore-based Scoot, to helm its turnaround. The new management, it was expected, would streamline operations and bring the four airlines owned by the Tata Group to two. That included Air India, Air India Express, Vistara,and AirAsia India.

Also read: Indian aviation sector in 2025: Airlines face headwinds

The move to build Air India into two arms, a full-service carrier and a low-cost one, along with the might and financial backing of the Tata Group, was expected to raise alarm bells for IndiGo. Instead, IndiGo responded with its own strategy, which would see an increased focus on international operations, even as it ramped up domestic operations.

Today, IndiGo has 64.3 percent share of the domestic market while the Air India group has 26.5 percent, leaving only 9 percent to others such as Akasa, SpiceJet and Alliance Air. IndiGo also has a significantly higher passenger load factor (PLF) compared to Air India, which means it can fill up more seats than its rival. As of March, IndiGo’s PLF stands at 84.6 percent and Air India’s at 80.6 percent. (Akasa’s is 92.5 percent.)

Last year, IndiGo’s market share in overseas flights increased from about 18.27 percent in April-June to 19.35 percent during October-December, according to data from the country’s airline regulator, the Directorate General of Civil Aviation. In that period, Air India’s market share fell from 24.79 percent to 23.05 percent.

“We see an increasing middle class and a newer generation that focuses on experiences rather than possession,” Elbers says. “We see an increasing international link both for Indian companies going abroad and foreign companies coming here. So, if you take all these realities, then what we have been doing is cultivating and keeping the foundation of the company ready.”

The move to scale up international operations has also meant that, since he took charge, Elbers has been busy stitching up codeshare agreements with global aviation giants such as Qantas, Japan Airlines, Virgin, British Airways and Malaysia Airlines, allowing their passengers to travel to destinations in India through IndiGo. A codeshare agreement is a pact to issue and accept tickets for flights that are operated by a partner airline. Through the partners, IndiGo flies to 80 destinations across the world.

“Of course, it brings extra revenue,” Elbers says about codeshare agreements. “That’s fine, but it brings more than that. It brings market awareness, brand awareness and customer feedback, and even for our people it is a new experience. Because suddenly we are no longer having planes only filled with Indian customers. We get a more international crowd, which is also changing some of the dynamics.”

Also read: Counterstrike: How IndiGo is taking the fight to Air India even before the latter's turnaround

Last year, IndiGo introduced IndiGo Stretch, a stripped-down version of the business class that full-service airlines operate, and a loyalty programme that helps to redeem points for flights, making it the only low-cost carrier (LCC) in India to offer such a programme. Considering it flies six out of every 10 passengers in the country, and ferries as many as 118 million passengers annually, the frequent flier proposition is expected to gain traction. Already, IndiGo has tied up with Accor Hotels for redeeming of points.

“IndiGo is responding to evolving market demands,” says Alok Anand, chairman & CEO of Bengaluru-based Acumen Aviation, an aircraft asset management and leasing company. “As a long-time flyer, I have often questioned why a loyalty programme had not been introduced sooner—so it is encouraging to see that gap addressed.” However, Anand finds the move toward premiumisation bold and somewhat counterintuitive, especially given aviation history, where, he says, “long-haul passengers, in both economy and business (like IndiGo Stretch), tend to benchmark services against full-service carriers.”

Then there is the focus on planes that can go long distances. IndiGo has ordered 30 Airbus A350-900, a wide-bodied aircraft that will help the airline go big on its long-haul operations. It has an outstanding order book of almost 900 aircraft comprising a mix of A320NEO, A321NEO, A321XLR aircraft, and Airbus A350. The Airbus A350 is expected to join the fleet in 2027. Last year, IndiGo also took delivery of 58 new aircraft from Airbus, the largest globally.

“Budget carriers globally have had to adopt new ways, adjusting to the post-Covid reality of competing with legacy carriers,” says Shukor Yusuf, founder and primary analyst at Endau Analytics, a Singapore-based aviation consultancy . “IndiGo will likely stick to its tried and tested core strategy domestically. Long haul presents more risks than rewards. LCCs today are only in name, as fares are no longer low as before.”

Low-cost no more

Meanwhile, the airline claims to have shed its low-cost tag, having moved to something of a hybrid model. India’s skies comprise Air India, the lone full-service carrier, followed by low-cost carriers Akasa, Air India Express and SpiceJet. On domestic routes, Air India Express, Akasa and SpiceJet had tried premium offerings before withdrawing them.

Also read: Ajay Singh is a survivor. But can he turn around SpiceJet again?

The transition, in many ways, shores up revenue from its full-service codeshare partners while steadying the customer base as a feeder for its A350 service, bringing business travellers from all over the country. India’s international passenger traffic is expected to grow by 15 percent annually over the next few years, according to ICRA.

IndiGo intends to offer business class on 45 of its 400 aircraft fleet, mostly on the metro routes in the domestic segment and international operations. “Compared to some other companies, we have such a size that when it comes to sub fleet of the domestic business class, it is 45 aircraft,” Elbers explains. “That’s the size of a meaningful airline. For us, it is going to be just a sub fleet. For others, probably that would mean all kinds of inefficiencies and increased cost.”

According to Anand of Acumen Aviation, sustaining the LCC label over long-haul routes is challenging, as customer expectations increase with flight duration. Typically, LCCs use secondary airports, do not have codeshare partners, or offer food on flights. “IndiGo has left the classical LCC station long ago,” Elbers says. “We fly from the top four airports. We have a lot of corporate fares. We do catering. So, I think what we have is a very low-cost basis. So, cost leadership is the secret sauce of IndiGo.”

The Pieter Elbers way

Elbers began his tenure by going back to the basics, focusing on what he calls the three pillars of “reassure, develop and create”. That meant prioritising on-time performance, hassle-free service, affordable fares, and turnaround time, among others. Then there was development of new practices in human resources, artificial intelligence and digitisation. Then came launch of new services such as business class seats and loyalty programmes.

The result of all that, Elbers says, is visible. From flying 75 million passengers annually in 2022, the airline now ferries 118 million annually, with as many as 1 million passengers being added every three days. “The market,” Elbers says, “has grown, but not by 50 percent. We have also jumped from 20 to 40 international destinations in a short time.”

In the domestic market, it weighed in IndiGo’s favour that the Nusli Wadia-owned GoAir shut down operations in 2023 after its aircraft were grounded, while some others were starved of funds or struggled with supply chain issues. Over the past two decades, IndiGo has been an outlier in India’s treacherous skies that have claimed high fliers such as Jet Airways and Kingfisher Airlines.

Also read: India's among Etihad's top three markets: CEO Antonoaldo Neves

“We have seen consolidation in the US, Europe and China. Even in countries like Australia, Japan and Korea, they have gone to either one large airline or two large airlines. Given the size of India, having two large airlines of size is something that helps for the international competition. There is room for others to compete, but competition is tough. And that is the reality of the market,” says Elbers.

Looking at it another way, IndiGo is the reality everybody needs to reckon with, as it adds as many as 100 new routes in a year to its bouquet. Even in the international market, the airline has now begun to move away from traditional business routes, such as the India-West Asia corridor, to add more leisure destinations. By 2027, when the Airbus A350-900 aircraft join the fleet, IndiGo is expected to launch direct flights to the US as well.

“We must give credit where it is due,” a senior industry expert says on the condition of anonymity. “Pieter has been spearheading the transformation at IndiGo. It is not easy to change the culture of an organisation, especially when you have treated all your passengers the same for many years.”

What lies ahead

For now, the path is clear for Elbers, an early riser who prefers to spend his mornings in the gym. It is all about ramping up international operations, especially since 65 percent of the population lives in South Asia. “The opportunity to connect 65 percent of the world’s population either to and from India or connecting over India is enormous,’ he says. That means adding more aircraft and raising the proportion of its total available seat kilometres for international routes to 40 percent by 2030.

“The share of international available seat kilometres used to be in the low 20s, and we are touching 30 percent now,” Elbers says. “It will go up to 40 percent by 2030. But it also means that we continue to develop our domestic network.”

Also read: GM Rao: The return of the infra king

Air India’s orderbook comprises 50 Airbus A350s, 20 Boeing 787s, and 10 Boeing 777-9s widebody aircraft, as well as 300 Airbus A320/321 Neos and 190 Boeing 737 MAX single-aisle aircraft.

“Air India does have an early lead in international operations,” says Anand. “IndiGo is just entering this arena but has the agility and operational focus to adapt quickly. Importantly, IndiGo has a proven track record of deploying new aircraft with minimal disruption.”

Alongside, IndiGo has been investing in the backend, revamping its IT solutions and training, in addition to setting up hangars to undertake repair and maintenance. The company has set up an MRO facility in Bengaluru, in addition to setting up a company in GIFT City to undertake sale and leaseback of aircraft.

“The sale-and-leaseback model was a very important building block at that stage of building the company in the past,” Elbers says. “More recently, we started to diversify a bit with some operational leases and some financial leases. These lease durations get a bit longer and with longer leases, you will have to do more maintenance.” Last year, as many as 30 leases were made through GIFT City. All that means IndiGo is gunning for more.

“We are already the third largest domestic aviation market in the world. India has the largest order book of airlines in the world and IndiGo took the most planes of any airline in the world. So, this is India’s time,” Elbers says.

By the look of it, it may be Elbers’ time, too.