Govt Should Consider Increasing Upper Caps On Domestic Airfares Amid Rising Fuel Prices: IndiGo CEO

The Ministry of Civil Aviation should consider increasing the upper limits on domestic airfares as the rising fuel prices has become a "real problem", IndiGo CEO Ronojoy Dutta has said.

Moreover, India's largest airline IndiGo is likely to introduce a business class in certain international flights as it is looking to expand to regions like Europe, Africa and Southeast Asia, he said in an interview to PTI.

The ministry had imposed lower and upper limits on domestic airfares based on flight duration when services were resumed on May 25, 2020, after a two-month lockdown due to the pandemic. For example, airlines currently cannot charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 (excluding GST) on flights with duration of less than 40 minutes.

The lower caps were imposed to help the airlines that have been struggling financially due to travel restrictions. The upper caps were imposed so that passengers are not charged huge amounts when the demand for seats is high. The fuel prices have been rising since the Russia-Ukraine war began on February 24.

Dutta said the two-class configuration is being considered for A321XLR planes, which will be delivered to IndiGo by Airbus at the end of 2024 and will operate in international sectors.

IndiGo currently has a fleet of 275 aircraft and all of them are narrow-body planes such as A320neos and A321neos with just economy class seats.

Dutta also said that adding wide-body aircraft to IndiGo's fleet is "just a matter of time" once Indian airports develop themselves into hubs, where the management of time slots for arrivals and departures of flights is much better and the time taken to transfer a passenger from an arriving flight at one terminal to a connecting flight on another terminal is extremely less.

A wide-body plane has a bigger fuel tank that allows it to operate long-haul international flights. In India, only Air India and Vistara operate wide-body planes.

Asked about the budget carrier's plans to increase legroom on planes that operate in international sectors, Dutta said, "We are looking at the configuration of these planes and the obvious question is do we have two-class planes or not. So, we haven't decided that."

Once the airline takes a decision on that, only then it can decide how much legroom it will have in the economy class, he said.

However, he clarified, "in the back (economy class), the pitch is not going to go up too much... Maybe on some (economy class) seats it'll go up to 33 (inches) or so".

"But the real issue is are we going to go with a business class or not, and we haven't decided that. But it's increasingly looking likely that we will," he added.

Currently, the pitch of economy class seats in IndiGo's planes is 30 inches.

Dutta said the two-class configuration is being considered for A321XLR planes that will operate in international sectors.

IndiGo had placed an order for 300 A320neo family planes, which include A320neo, A321neo and A321XLR, with Airbus in October 2019.

The European planemaker said in May that the launch of the A321XLR aircraft will be delayed from 2023 to 2024.

Dutta said IndiGo's XLR planes are due to come at the end of 2024.     

"As far as our delivery situation is concerned, there is no change," he said.

Asked if procuring wide-body aircraft is on the table for IndiGo, the CEO said, "Look, the issue really is that our major airports -- Delhi, Bangalore and Bombay -- need to be developed into hubs, which they're not."

"Now what does it take to develop an airport into a hub? There are two key things. One is minimum connect time... Internationally, the norm is that you should connect in maximum 75 minutes," Dutta noted.

In India, the time to connect a passenger from one terminal to another at an airport like Delhi and Mumbai is too long – it takes about two-and-a-half to three hours. So, that becomes a problem, he said.

"And secondly, the slots (to operate international flights) can't be just spread throughout the day. As you know, in banked structure, the slots have to be compressed within a certain time frame," he said.

The minimum connect time is the time considered sufficient for a passenger to transfer from an arriving flight to a departing flight.
Dutta said major airports in India are working on these two issues.

"So, I'm very hopeful that yes, that (resolution of the two issues) will happen. Once that happens, progression to wide-body aircraft is just a matter of time...," he said.

"When the XLR aircraft comes, we want to do a lot of international to international connects -- from the Middle East to all the ASEAN countries, from China to Africa and from Asian countries to Europe," he said.

"All that becomes feasible with the range of the aircraft. But we need the airport infrastructure to support it," he added.

On IndiGo's international expansion plans, Dutta said currently, the airline is able to fly as far as Istanbul because of the range of the narrow-body planes it has but it sees plenty of opportunities to grow.

"As the XLR comes in, we can go up to seven hours. So, the markets we're looking at, we've always said is sort of seven hours from Delhi, seven hours from Mumbai, seven hours from Chennai, seven hours from Kolkata," he said.

"Europe is a big focus for us, CIS countries are a big focus for us, and Africa is a focus for us. So yes, all around and then in new countries in Southeast Asia as well," he added.

Dutta said the Ministry of Civil Aviation should consider increasing the upper limits on domestic airfares amid rising fuel prices.

First, there was the uncertainty of the COVID-19 pandemic and now these very abnormal fuel prices, he said.

"If anything, the higher band needs to be moved up because, you know, we just need to keep the fares at pace with fuel prices and fuel prices are a real problem.

"I mean, every month they're going up 11 per cent, six per cent and so forth. So, no airline can survive with these high fuel prices if you don't raise fares," he added.

Dutta further said, "We are obviously for a free market. Let the market decide what the right fare is."

(PTI)