IndiGo, which is the top low-cost carrier (LCC) of India in terms of market share, offers international and domestic airlines tickets. More than half a dozen investment bankers will be making presentation to this LCC in Paris soon. These finance officials are competing to manage the upcoming initial public offer (IPO), which is worth around $400 million, by the no-frills airline. Initial Public Offering or IPO is a type of public offer, in which the shares of stock of a company are sold for the first time on a security exchange. Several Indian, as well as international finance institutions, is in the race for this IPO.
Operated by the InterGlobe Enterprise Ltd, this budget airline is the largest Indian LCC with a market share of more than 31 per cent as per latest data. Some of the leading bankers, pitching for the mandate are Axis Bank, JM Financial Institutional Securities Pvt. Ltd and Deutsche Bank. The Centre for Asia Pacific Aviation (CAPA) stated recently that despite the challenges in the aviation sector, there are brighter spots, such as the success of IndiGo in establishing itself as a significantly profitable carrier. It further added that the time to leverage this success had arrived.
According to experts, this IPO could be the largest-ever airline IPO in the history of Indian market. The no-frills airline could raise whopping amount of over $400 million through the sale of shares, according to aviation experts. Speculations are being made that this significant financial twist might affect the growth plans of the airline considerably. It is being expected that the carrier might place a large order of about 250 models soon. The LCC has a current fleet size of more than 75 aircraft and an awaited delivery of around 185 models. The reservations of IndiGo domestic flights have increased significantly, putting the LCC in a profitable position.
It seems accolades are making their way for the leading carrier in Indian aviation in terms of market shares. IndiGo has been leading the pack of domestic airlines for successive years in a row and strongly looks forward to do the same in the forthcoming years. After recording a boost in domestic flight booking in the running calendar, the low-cost carrier (LCC) has been voted as the Pinnacle Domestic Airline of the Year by Bangalore International Airport Limited (BIAL). This is the first time this award ceremony was being organised. While IndiGo bagged the honours in the domestic category, Emirates was the carrier that was conferred the International Airline of the Year award.
First Edition of the Ceremony
The award was given on the basis of services offered during the last one year, passenger satisfaction and efficient management of the airlines. IndiGo, which has recently reported a profitable run for the fifth consecutive time, excelled in all the categories and was adjudged the best. Incidentally, this LCC was also voted as the best rising low-cost airline in the world in 2013 by Skytrax, a global forum for monitoring the performance of airlines as well as airports. This awards ceremony was conducted at Kempegowda International Airport and this award function was to commemorate six years of its operation.
This LCC seems to be in the perfect position where it dreamt to be. Recently, as per the reports for the fiscal ending March 2014, the airline has grabbed hold of more than 31.5 per cent of the market shares. This puts it miles ahead of its competitors and quite well-positioned to take a third of the market shares. Riding high on a host of discounts, IndiGo flight booking has witnessed a sharp increase during the running calendar year. The LCC will definitely, further improve its position and try to strengthen its position in the market before AirAsia and Singapore Airlines start operating.
IndiGo is the most popular and favoured airline that operates in the Indian market. Operating on the low-cost model, it is also the leading airline in domestic aviation in terms of market share with a net profit of over 785 crore INR in the financial year of 2013. Apart from these aspects, it is also among the fastest growing low-cost carriers in the world. Several discounts are offered by this carrier from time to time to boost the sales of its flight ticket. It operates with a fleet of over 75 Airbus A320 aircraft and looks forward to hike its fleet size in the next couple of years.
Low-cost Model
This LCC, just like most other common names operating on this model, charge separately for meal service. It has no loyalty program, which is another typical feature of LCCs. Concentrating only on cheap ticket rates, punctual services and premium connectivity, Indigo online booking has been increasing in the last five years or so. This has led its path to make it the only airline in the country to post a profit five years in succession. Riding high on its success, this LCC has maintained a steady growth and looks forward to increase the number of its destinations in the near future.
Possibility of Tie-up with Qatar Airways
Qatar Airways, the flag carrier of Qatar, is looking forward to explore and enhance its market in India. It is looking to go for a tie-up with IndiGo, so that it is able to widen its global network. However, there are speculations whether this agreement is possible or not. There have been instances where LCCs and full-fledged carriers have had a tie-up. Only time will tell whether there would any such bonding between the two carriers and its effect on aviation.
As Indian aviation is set to enter a stiff phase, the competition seems to build up already. The government has approved the foreign names to start their operations soon, and it is time for the Indian carriers to gear up for a fresh challenge. In this aspect, the market leader seems to be perfectly abreast with the current scenario. Unfazed by the difficult situation, they are keeping up the good work that has resulted in their successful run, in the Indian market for five consecutive years. Indeed, it has been synonymous with the availability of cheapest air tickets, punctual services and excellent flying conditions.
Recently, this low-cost carrier (LCC) was in the news for offering discounted airfare to travelling families. Discounts of up to 25 per cent were being offered for families. IndiGo ticket booking witnessed a boost during the last week, having a direct positive impact on its revenue. Recently, it has been revealed that this airline is trying to bring down its cost of flying further. If the sources are to be believed, reduction in the cost of jet fuel, which is one of the main contributors to its expenditure, is being tried by IndiGo. Incidentally, the airline is trying to import aviation turbine fuel, which is also referred as jet fuel, directly. As a result, it is expected that this will bring down the expenditure of the airline by a significant margin. However, the carrier did not divulge details about how it is being done. Though, it is known that the LCC will be able to make quite some savings in this aspect, the exact numbers could not be calculated.
This step will definitely, help the airline to make further profits in the future, thus strengthening its position as the market leader. In a situation where the competition is expected to stiffen, this will set the tune for a neck-to-neck rivalry in national aviation.
