After grabbing the headlines last year by putting the the world’s largest commercial aircraft order-for 500 narrow-body jets of the Airbus A320 family-IndiGo once again forced the aviation world to sit up and take notice recently by ordering 30 Airbus A350-900 wide-body aircraft, with deliveries expected to begin in 2027 .Also, IndiGo has purchase options. for another 70 aircraft of the A350 family.
India’s largest airline, which is also among the largest budget carriers in the world regarding the passengers flown, has now made clear its intentions with this latest order. After ruling the Indian skies, I dream big to make a mark in the world with non-stop, long-haul flights from Indian airports. There is a problem, however.
Although the low-cost, short-haul model, of which IndiGo is a clear example, has been mastered by a number of carriers worldwide, the same cannot be said about the long-haul airline model. , low-cost. Many tried, burned their fingers, and even closed the shop, while some continued to fight. Numerous failures and few, if not all, relatively stable and profitable long-term budget airlines underline the reputation of this segment as the Last Thule of commercial aviation.
Wow Air, Norwegian Airlines, Thomas Cook, Air June, XL Airlines, and a number of other carriers failed at the long-haul and low-cost airline model. Some others in the segment, such as AirAsia X, have been struggling. While there have been a few long-term profitable budget operations, including Scoot, Jetstar, Cebu Pacific, Tui and French Bee, it remains a segment full of pitfalls and unknowns with more crashes than happy landings.
What makes this segment a largely unconquered frontier, and what can IndiGo do to plant its flag and build a long-term successful product and network? There are no simple answers, only numerous factors, data points, and business and product philosophies. For years, airlines have tried to develop recipes for a successful long-term and low-cost model from these ingredients, but most have failed the taste test. Now IndiGo has found its way to perfecting the secret sauce, if there is one.
High-cost dilemmas for low-cost careers
The fundamental business principle of low-cost carriers (LCC) is, at least in theory, rather simple: minimize costs to offer low fares and fill planes, while still making a profit. An escalation of costs, on the other hand, limits the pricing power of LCCs, thereby narrowing the gap with full service carriers (FSCs).
One of the main factors that make it difficult to operate and sustain a low-cost and long-term operation is the high cost of fuel compared to short-haul hops. This means that airlines flying longer routes with larger aircraft have relatively less control over their costs, as fuel costs, which are determined by international oil prices, tend to have a disproportionately high share in the cost structure.
The latest wide-body aircraft such as the A350 are more fuel efficient than previous generations of aircraft, but the jury is still out on whether they can really swing the needle in favor of low-cost air travel and long lasting. Operating narrow-body jets is a hallmark of the world’s leading LCCs, but wide-body aircraft are much more expensive. And new generation wide body aircraft even more so.
So there are more costs associated with wide-body aircraft operations, as they require additional manpower – cabin and cabin crew – due to journey lengths, and rest and fatigue management requirements. Budget carriers thrive on fast turnaround times and high capacity utilization levels, and achieving these on a sustained basis in long-term operations can be challenging. In addition, maintenance and repair costs for large aircraft tend to be higher and lead times longer.
Networking skills
In addition to cost efficiency, network planning is the big differentiator when it comes to success and failure in business aviation. While it is often the product and prices of an airline that receive the most attention in the public eye, its strategy and the development of the network are fundamental for the way of the operational and financial rate. In the case of low-cost and long-haul airlines, the importance of network design is more pronounced.
An airline’s network design is shaped by a number of factors, including demand and competition, so there is no one-size-fits-all formula. And while there will be some unique features or quirks with each airline’s network, aviation industry experts point to a few common elements in the network designs of some of the relatively successful long-haul carriers. and low-cost.
As in the case of successful short-haul LCCs, these elements generally include multi-route operations with few or no competing airlines and with generally low flight frequencies, rather than trying to break into routes high frequency and heavy competition. Operating from several hubs or points instead of one major hub could be a better network design for LCC operations even in the long-haul segment.
In other words, the global experience with successful LCCs has shown that they tend to do better financially with point-to-point networks and a focus on serving latent demand and also stimulating on not so busy routes. And often, they try to fly to and from secondary airports that are cheaper to operate than major airports.
Of course, there would be exceptions due to factors such as demand levels in source markets, fleet strengths, geographic spread of the airline’s home country, airport infrastructure and markets and domestic and regional aviation regulations, among others.
Llow-cost with some frills
Low-cost product positioning is also important. A barebones, no-frills product without a lot of comfort and amenities could do the job for shorter flights. But when it comes to long-haul flights, flyers may be reluctant to choose such a product. And enhancing the aircraft with more amenities, whether cargo outlets, more comfortable seats, in-flight entertainment (IFE), and ovens to activate the hot meal service, among others, will certainly add to the costs.
Different airlines apply different solutions and innovations, some of which are not exactly in line with what the products of low-cost airlines have traditionally represented. Many in the industry now refer to these as hybrid products, offering a mix of LCC and FSC features.
There are carriers that have introduced dual-class cabins, offering seats and services of business class or premium economy for a higher price. Some also offer amenities such as in-flight entertainment, power points and hot meals to economy class passengers either as part of the standard offering or on request for an additional price.
Some of these airlines also offer the all-inclusive bundle fare option, in addition to the standard LCC practice of unbundled fares that require passengers to pay extra for everything from seat selection to baggage allowance to food and drinks on board.
IndiGo’s long-haul flight path
IndiGo has so far not commented on the potential routes on which the A350 will be deployed, its cabin configuration, and the services that the airline could offer on its wide product. In a recent investor call, IndiGo CEO Pieter Elbers said that all options are open and decisions will be taken in due course based on the evolving needs of Indian flyers and the airline landscape. country’s aviation.
With deliveries of the A350 expected to begin in 2027, IndiGo still has time to finalize its strategy and network design, and the long-term product it wants to offer. While the airline has not disclosed details about the two accounts, but there are indications of the broad direction it could take.
On the product front, there are signs that IndiGo could go for a dual-class cabin configuration, something that other successful long-haul LCCs have also done. With some premium economy seats or like business class complete with a few bundled services – sold for a significantly higher price than regular economy class seats – airlines can earn additional revenue that they it helps to offer lower fares to fill the rest of the cabin. . IndiGo currently offers an all-economy cabin on almost all its flights.
As for the IFE, the airline has already carried out a test on the basis of BYOD. Delhi–Goa street It would be interesting to see if it will graduate to seat-back screens in its A350s, like Paris-based long-haul LCC French Bee. Will there be recharge points on board and will IndiGo finally start offering hot meals? These are among the questions that the airline will perhaps answer closer to its induction of the A350.
Coming to IndiGo’s plan for its network design, Elbers said that IndiGo will seek to offer direct international flights from many points in India, and not just the major airports of Delhi and Mumbai. This plan appears to be in line with the multi-hub network designs of most successful long-term LCCs. Given the growing demand for international travel and IndiGo’s strong domestic and short-haul international network, this model could serve the airline well in long-haul operations with strong potential for domestic-to-international and even international-to-international connections.
In the last two years, IndiGo has pushed its international network expansion to the extent that it can with its narrow body fleet. But instead of entering highly competitive and busy routes, the airline focused on identifying underserved routes and those with latent demand, while also stimulating demand on some others. This, again, is a strategy that has worked well for a number of LCCs in their long-haul operations, and there are clear indications that IndiGo may persist with it in the design of its long-haul network.
