Ovens and hot meals: The last frontier for IndiGo after record profit

In 2006, when IndiGo’s first flight took off, the top management said its USP was “single-fleet type”. This allowed the airline to increase utilisation, decrease training costs and reduce inventory holding. As the airline grew, the single-fleet type slowly started making way for a differential fleet, including new types like the ATR. All along, the model remained to have a mono-class offering, until today — when the airline announced that it would have a business class product.

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This comes on the day the airline announced a record profit of ₹8,172.4 crore, not just the highest for the airline but the highest for any airline in India ever. The airline announced that it is taking the next step in IndiGo’s evolution. It will launch business class on the busiest and business routes in India.

Which could be the busiest routes?

The Delhi-Mumbai-Delhi remains the busiest route in the country, with 377 weekly frequencies each way. This is followed by Delhi-Bengaluru-Delhi and Mumbai-Bengaluru-Mumbai.

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The airline will look at not just the routes which are busiest in terms of numbers, but also the ones where there could be a demand for business class passengers and where rival Air India (and Vistara) operate business class. At similar fares, IndiGo’s cost structure allows for better margins and, at the same time, allows it to take on the battle with Air India with discounted pricing.

Code share the driver?

Over the last few years, IndiGo has increased its codeshare partnerships. What started with Turkish Airways now has partnerships with Virgin Atlantic, British Airways, Qantas, Jetstar, Qatar Airways, American Airlines and an MoU with Malaysia Airlines.

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Many of these airlines offer premium economy class while most of them offer business class. What was restricted only to short sectors in India is seeing expansion, and the mismatch of class of service could lead to passengers opting for competition. Historical data on connecting premium passengers would have been a critical driver for this selection.

Overall, after the demise of Jet Airways, the business class offering in India has reduced with Air India not expanding until the takeover by the Tata group.

Operationally challenging?

The airline will not convert all its aircraft to have a business class product. This puts forward some challenges that the country has seen in the past with both Kingfisher Airlines and Jet Airways, which tried the low-cost offering in the form of Kingfisher Red and jetKonnect.

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Having a sub-fleet creates confusion in the minds of consumers and, at the same time, reduces the ability to swap aircraft at the last minute for fear of not having a similar configuration aircraft available.

The roll-out will also place the challenges of the sector not having all flights with dual class and the business traveller facing a mismatch in service. The speed at which this can be rolled out will be critical to capture the critical mass. The airline has not had many inductions of the A321neo and it is possibly planned to have a rapid induction in a dual class format later this year. The A321neo in dual class makes more economic sense over the A320neo in dual class since it allows to keep unit costs lower.

What next?

The airline has indicated that it would have a formal loyalty programme soon, which could well be launched during the time of the launch of business class products. It is already trialling inflight streaming on the Delhi-Goa sector.

For longer flights that it intends to operate or like the Bengaluru-Denpasar flight it already operates, the missing link is the charging points. Passengers can get their own content but there is a limit to battery life.

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The last frontier thus remains “ovens” to offer hot meals. It is about time that the airline takes a hard look at the cost of having ovens on board. They may finally make their way with the planes which offer business class, without which the meals would be an assortment of cold snacks — pretty much like those served on Vande Bharat trains.

Tail Note

The action now shifts to August when the airline will announce the product. The airline will be announcing more details including routes, number of planes and the specifics of the product.

What will be the mix? Kingfisher Airlines had zeroed in on eight business class seats just before it went down. Air India and Vistara offer 12 on the A321s while eight on the A320s. While a European-style business class allows for easy reconfiguration between economy and business sections, that is not the same for a full-fledged business product — which IndiGo would be looking at.

We now have a complex mix in Indian skies, where a traditional full-service carrier has configured its newer aircraft in all-economy configuration, its subsidiary low- cost carrier Air India Express having business class seats, and IndiGo, the country’s largest carrier and a champion of low-cost, deciding to add business class.