Indigo soars in Q1, but is it too early to celebrate?

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₹1 lakh crore to keep Air India afloat before selling it to the Tatas for ₹2,400 crore and saddling the conglomerate with ₹61,000 crore of legacy debt and liabilities. Dutch carrier KLM, the world’s oldest airline in operation, is still afloat thanks to a merger with another government-backed airline, Air France. Meanwhile, Italian carrier AlItalia shut shop in 2021 after going bust.

This is why Indigo’s spectacular Q1 results are a cause for cheer. India’s largest airline by both fleet size and market share logged profit after tax of ₹3090.6 crore in April-June 2023, the highest ever single-quarter profit of any Indian carrier. Its revenues from operations, at ₹16,683.1 crore, were up more than 29% from ₹12,855 crore a year ago.

This too, is a record for an Indian airline. Indigo, of course, is no stranger to setting records, starting with its then unheard-of pre-launch order of 100 Airbus A320 aircraft back in 2005, which it topped with a 180 aircraft order in 2011 and a 300 aircraft order in 2019. It has now set yet another record by ordering 500 aircraft from Airbus, breaking Air India’s short-lived record order of 470 aircraft distributed between Boeing and Airbus.

With record revenues and profits, revenue passenger kilometres (RPK) up nearly a third from a year ago, more than 2.6 crore passengers carried in the first three months of FY24, and 500 more aircraft on the way, is this Indigo’s time in the sun? Will it be the exception to the rule that more airlines lose money than make it? After all, its current profit margin, at over 5.3%, is four times the global aviation industry’s margin of 1.2% forecast by IATA for calendar year 2023. So it’s time to break out the champagne, right? Not quite yet. The unpredictable