In an alternate universe, Pieter Elbers might still be leading KLM as it fights hard just to maintain its current activity levels against the threat of capacity cuts at its main hub.
Instead, however, his departure from that job and subsequent appointment in 2022 as chief executive of low-cost carrier IndiGo means he is leading a carrier that expects to double in size by 2030, in an aviation market awash with growth potential.
Indeed, as demonstrated by the airline’s fiscal third-quarter earnings announcement on 2 February, there is increasingly substance to the predictions about India being a growth engine for the global aviation industry, as an IndiGo emboldened by a mega-order at last year’s Paris air show goes up against a rejuvenated Air India and smaller rivals including an expansion-minded Akasa Air.
There are near-term frustrations, not least that more than 70 of IndiGo’s 360 or so aircraft are grounded by supply-chain delays and inspections relating to issues with the Pratt & Whitney PW1100G engines that power around 136 of its A320neo-family jets. But despite those groundings having months left to run, the market fundamentals have not changed.
“We are confident that market growth will continue,” Elbers said during the earnings call. “We are confident that we are in a position with mitigating measures to take share and to take part in the growth of the market.”
Those mitigating measures refer to the various steps taken by the carrier to offset the temporarily lost capacity, including holding on to older aircraft for longer, some short-term leases and the induction of new aircraft.
Underpinning IndiGo’s strong performance is growing local demand for air travel, driven by economic expansion in its home country.
Elbers cites a recent Indian government projection that the domestic airline market will double by 2030, adding: “I think the international market is likely to grow faster.”
That is bringing a wide range of passengers to IndiGo’s flights, Elbers says, including a lot of first-time travellers, alongside those visiting friends and family, leisure travellers, connecting passengers and corporate customers.
There is a note of surprise in Elbers’ voice when he mentions connecting passengers – a category that was front-and-centre in his KLM days though less obviously suited to low-cost travel – but he cites India’s geography and IndiGo’s growing network as reasons for more passengers using the airline that way.
“India is becoming more and more an aviation hub, and the geographical position of India is really helping us to deliver on that promise,” he says.
Meanwhile, on corporate travel, Elbers estimates that numbers are already back at pre-Covid levels, “fuelled by the economic development of India”.
“If we look to the economic numbers quarter over quarter and if we look at the GDP forecasts, I think we can be reasonably confident that the number of corporate-driven or business-purpose-driven travellers will continue to grow,” he says, in a trend not seen in many geographies post-pandemic.
That reasonable confidence regarding continued growth stretches to IndiGo’s other passenger categories too.
Elbers is clearly conscious, however, that the airline sector has often failed to tap the Indian market’s potential. He is, therefore, keen to stress that the carrier’s current profit run – five quarters and counting – has not happened by chance.
“When we launched our strategy post-Covid, a year and a half ago, we took a whole range of initiatives,” he says. “We often start talking about the results, but the results are the outcome of all the initiatives and activities we have undertaken.”
Those initiatives include an acceleration of digitisation across the business, a big network expansion – IndiGo flies around 500 routes today, Elbers notes – plus a number of partnerships with other carriers.
“That combination of a very solid market development, a network which keeps on expanding and [our] digital positioning… is really starting to bear fruit,” he says.
IndiGo, which was already a rare Indian success story heading into the pandemic, is ultimately looking stronger coming out of it under Elbers’ leadership.
Challenges inevitably remain, but the fact that IndiGo has not been derailed by the current aircraft groundings says something about the level of maturity it has achieved.
Helpfully, the wider ecosystem appears to be following suit.
“With the growth of the domestic and international networks, with airports stepping up in terms of facilities, we really see that all these elements are coming nicely together and are helping to solidify the new levels for IndiGo, which at the end of the day is a good thing because we get a much more stable industry and as an industry we can invest in the future,” Elbers concludes.
