IndiGo maintains fares at Rs 2,500-3,000 per ticket

Low-cost airline, IndiGo has said that it should turn profitable late next year even as it maintains its average fare of between Rs 2,500 and Rs 3,000 per ticket.

The IndiGo President and Chief Executive Officer, Mr Bruce Ashby, told Business Line that as per its original target, it should break even after about 18-24 months of operation. “..and we are not changing that projection. By that time, the relatively high costs of start up and the inefficiencies of initially running a very small operation have been overcome,” Mr Ashby said.

Hike in fares

Even if some of the other low-cost airlines do increase fares, it may or may not have any impact on IndiGo’s fares. Incidentally, the country’s first low cost airline, Air Deccan, is in the process of increasing fares Rs 500- 1,000 and views it as one of the measures to turn profitable. “We note that during this week, Air Deccan was selling Rs 99 fares on multiple sectors including metro-metro sectors, as well as some zero rupee fares on some of its new sectors. IndiGo’s fares on routes we serve are based on the fares offered by all of our competitors on each route, as well as on our own available capacity on the route. Thus an increase in fares by Air Deccan, if it in fact takes place on a route we serve, may or may not have any impact on IndiGo’s fares,” Mr Ashby said.

He said his airline does not track the ‘yield’ or revenue per passenger km average running cost of the airline per km but its focus has always been profitability and which is not mutually exclusive from expansion. “However, and more importantly, our average fares (including surcharges) have been running in range of Rs 2,500-3,000,” he pointed out.

Fleet size

The airline plans to take delivery of four more aircraft taking the total number of aircraft inducted into the fleet during 2007 to 15. In 2008, it will take delivery of eight more aircraft taking the fleet size to 23. There will be no changes to the fleet plan and the current fleet size is 11 A320 aircraft.

The airline which completed a year of operations last month, carries about two million passengers and has completed 15,000 departures. IndiGo currently flies to 15 destinations with 78 daily flights.