IndiGo expresses interest in Air India’s international operations

IndiGo, the Indian budget airline has expressed a keen interest in acquiring the international operations of fellow national carrier, Air India. However, IndiGo has made it clear from the onset that it would not be interested in any form of joint venture with the Indian government. IndiGo’s founders, Rakesh Gangwal and Rahul Bhatia, have also expressed an interest in Air India’s low-cost international subsidiary, Air India Express.
Investors in IndiGo are less keen on the idea, with shares falling 7.7 percent over a two-day period from June 29 after civil aviation minister Jayant Sinha disclosed that the budget carrier has expressed interest in the loss-making state-run company. Over the last seven sessions, the company’s share value has fallen a further 2.8 percent.
In a conference call with analysts, investors and Gangwal, Rakesh commented that: “India is the third largest aviation market, and the second largest country in terms of population. It is going through significant economic growth, and prosperity is on the rise. The country continues to be dramatically underserved in the domestic aviation space, and that is why we are witnessing domestic traffic growth of 15% to 20% every year.
“On the international side, we believe that India represents one of the largest untapped international air transportation market opportunities that is out there, and the country certainly lacks its fair share of long-haul international flights. In reality, India’s international air transportation hubs reside outside India.”
Referring to IndiGo’s current success and expansion plans, Gangwal added: “Over the last ten years, IndiGo has established a significant domestic presence and now has a little over 40% of the domestic market share. In doing so, we have also been able to build meaningful operations at all the large metropolitan cities of India. And, in the years to come, we expect to keep up our pace of rapid growth in the domestic market. In fact, during Fiscal Year 2018, between the A320s and the ATRs, we expect to add almost 50 aircraft – a remarkable number and we have built the internal capability and muscle to execute on that plan.”