Thursday, July 25, 2024

Does IndiGo Need A Hot Towel When It Is So Far Ahead

By Bikram Vohra

Bikram Vohra, Consulting Editor, IA&D

Harold Evans, the iconic editor of The London Times was once famously quoted as saying; if it ain’t broke don’t fix it. Far too often the need to mess with things have proven to be successful tends to end up pulling the rug from under the enterprise. IndiGo Airlines having captured 52 percent of the domestic market with its branding and its service ethos living up to one another and offering an option that was inexpensive, attractive, and hugely efficient.

On time performances provided a key commodity called trust and the flying public brought into that reliability factor, it being rare enough in itself. On board facilities gave the ambience of frills at a low cost to the point where even the affluent and privileged felt why not go Y class on IndiGo, it is a three hour hop anyway. That IndiGo cleverly gave you a faux biz class aura with fast forward and special check in, first to reunite with your luggage at the carousel and tick the box for a meal service worked to the point where it became smart to take this carrier in domestic and international routes. No waiting in line, look at the money saved.

It was a brilliant blueprint and the main part of the ‘trick’ lay in the egalitarian nature of the cabin. Even the relatively upmarket clientele felt no one was upstaging them, there was also no need to be embarrassed and go into torturous details about how they could not get a seat on a full service carrier, and so they chose this one because it was a rushed decision. Gradually the new generation of even the privileged sections of society surrendered the embarrassment of slumming so to speak because IndiGo had become a fashionable icon and it sounds common sense in financial terms. The millennials were all for it. IndiGo set the standard and other challengers were hard placed to keep up.

Now, with the purchase of Airbus 321neos things could change. IndiGo would say for the better with the idea of adding a business class being tossed around rather seriously. An Airbus release confirms that IndiGo’s outstanding order tally stands at 203(A320neos) and 331(A321neos). The A321neos will be a combination of its base option, long-range and extra long-range versions with the clear idea of expanding its network globally and adding more international gateways to its map if it can win the slots. At the other end of the spectrum, keeping in mind the current Indian blueprint for becoming the third largest network globally by upgrading its regional connectivity
under the UDAN initiative IndiGo has also added 12 ATR-72s with the intent of creating a short haul route map in township and third tier pairings in the near future.

88 older Airbus A320ceos were deregistered by IndiGo during the pandemic and replaced with an almost similar number of more fuel-efficient A320neos and A321neos. This move has helped keep the fleet young, under four years on average. The process of A320neo replacement is expected to be completed only by the end of 2023 mainly because of their sheer number.

This is all good stuff and to add to it there is a belief that as operations expand IndiGo could look at a widebody option with the A350 leading the field. However, before all this happens there is a need to protect the psychology behind the success story. The moment you put a business class into the mix you create a ’them’ and ‘us’ divide that could become a drawback. Passengers who are now quite in love with the options as a low-cost carrier across the board would have reservations about paying top whack for a no frills carrier. If that is the case and there is no longer that sense of equality might as well pay a little more and ride a full-service carrier. If you have a bizzclass then your claim to being a low-cost carrier becomes suspect and instead of a very decent economy cabin, you now reduce it to a cattle car, in the infamous words of Congress MP Shashi Tharoor.

Sometimes success of this nature comes with a codicil that if it has worked so well to fiddle with it could compromise the level of service in Y class. Attention to bizz class would always be better and as any regular flier will tell you there is nothing more dismaying and annoying than walking through the front of the plane with its comparative opulence and watching a colleague smugly sitting there.

It is a fact that long hauls were out of the purview of last generation fleets because the gas guzzling demanded a large upload to break even. Now, top airlines have figured out that premium economy is a perfect foil for the ego and works very well because it does not break the cabin with that sharp divide.

One cannot fault IndiGo boss Ronojoy Dutta when he is quoted as saying, “Once you get to six, seven, eight hours, the body gets tired, people need to use the washrooms more, people need to eat more frequently, all of those things change … we have to redesign our product. Is it more pitch, is it more food, is it more hot towels, is it a business class?”

But at what cost? Low-cost carriers have a lower operating cost structure than other airlines. These companies work on the premise that there is a visible drop in the ticket prices, which makes it attractive especially on the under three hour flights to passengers. The loss they make in the pricing is compensated for by charging for all the extras like food, alcohol, boarding, seat allocation, and baggage priority unification. That feel good option that works in favour of loyalty. Since LCCs need numbers, their concentration is on filling up the seats. Most airlines do not admit this freely but bizzclass is not always the paying passenger. Between staff tickets, loyalty programmes, upgrades, freebies and general Commercially Important Passengers, a fair chunk of the seats are lost in terms
of revenue.

Indeed the arrival of fuel efficient now generation aircraft like the A359 and the Boeing 787, top level airlines like Singapore, British Airways and Lufthansa cannot be faulted for considering longhaul full economy flights because with a little more pitch they would impact positively on the bottom line. In a contrary fashion airlines like Spice Jet in India, Jetblue’s Mint, and Dubai’s FlyDubai have offered a bizzclass option but how much dividend it pays on the under three hours is a toss-up.

In India GoAir was followed by Spice and it is a logical assumption that low cost carriers make money on a heavy density upload in a single class configuration. Mixed cabins come with their own hazard since an empty seat in business is a bigger loss than an empty seat in economy.

With its phenomenal capture of the Indian market and its on the dot statistics, if its homework shows that a twin class cabin will work then we can expect the addition soon enough. One can only hope that it has factored in the psyche evaluation I have presumed here for its international routes so be it but call it a subsidiary airline like IndiGo plus and avoid fattening the golden goose and risk killing it.


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