According to IndiGo Airlines’ Chief Executive Officer Ronojoy Dutta, Indian civil aviation sector is in its “golden age”. He said that there are several opportunities for expansion and there is healthy competition between the airlines. Besides pointing out the provision of opportunities, IndiGo’s Chief also acknowledged that there are problems to be solved, including the high taxes of jet fuel. However, he feels that the problems and variations in economic cycles will persist, but the fundamentals remain strong.
Requests Reduction of Taxes on Air Turbine Fuel
The tax rates on jet fuels are 30% higher than the rest of the world in India. The government is yet to bring Aviation Turbine Fuel (ATF) under Goods and Services Tax (GST). There are also throughput charges, he pointed out.
The Indian aviation sector is generally witnessing lower traffic rates compared to the previous years. In September, traffic has shown a minimum hike of just 1.18%. The airfares also remained medium in October.
IndiGo focuses on expansion, no loyalty programs for passengers
IndiGo currently owns 48.2% of market share in the sector, IndiGo Chief detailed. The airline has been on an expansion spree in the year. It expanded its international networks by offering 11 new routes and has also placed orders for 300 planes from Airbus. The airline is targeting to provide wide-bodied aircraft for its long-haul flights. The airline is also focusing on increasing its codeshare agreements with top airlines to expand its network reach.
In September 2019, IndiGo flew more than 55.59 lakh passengers. IndiGo CEO also announced that there would be no loyalty programs for passengers. According to Dutta, loyalty programs are expensive, and IndiGo is a low-cost carrier and has to keep the cost low.
Interestingly, IndiGo and its competitor SpiceJet reported a massive loss in the quarter that ended in September. IndiGo reported a loss of Rs 1,062 crore in July-September quarter, around 63% higher than the previous year. High expenses are cited as the reason for the decline.