What's on the horizon for IndiGo after its best year yet?
swung to profit after incurring losses for four consecutive years. Net profit of over ₹8,000 crore was its best yet. FY25 could be better than last year with the management expecting an early double-digit capacity growth, provided prices of fuel, which form a large chunk of operating costs of airlines, remain stable.
In Q1FY25, the company is likely to see 10-12% growth year-on-year. This growth would restore capacity to levels seen before the accelerated inspection of engines due to the powder metal issue, which had grounded 35 aircraft (12% of its fleet) in Q4FY24. By the end of FY24, the company operated 367 aircraft.
The company plans to launch business-class service on India's busiest routes by the end of the year, a move aimed at increasing revenue rather than attracting a larger customer base. Currently, IndiGo operates flights without differentiation. With high load factors exceeding 80% over the past two years, this move aims to boost yield through premium pricing rather than merely attracting more passengers.
Yield is the price per passenger for one kilometre. Further details about the business-class offering, routes, and launch dates will be disclosed in August. Initially, the pricing for business class may not be significantly higher to avoid competition with Tata group airlines, potentially resulting in a muted impact on the airline's yield.
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