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IndiGo gets government approval to add 400 more planes by 2025

The Economic Times:  March, 2015

New Delhi: IndiGo, India's largest carrier in terms of passengers flown, has received approvals from the government to induct another 400 planes in its fleet till 2025, taking the total addition to 550, a development that analysts believe is a prelude to the airline getting into cross-border ventures.

The airline has begun the process of inducting the aircraft, which add up to more than the total number of 400 aircraft that scheduled airlines in India operate today. IndiGo has already inducted 12 of those new planes in its fleet.

The plan to add 550 aircraft in a span of a decade, if implemented, will be the biggest-ever fleet induction in the history of Indian aviation.

IndiGo has always surprised the market with its huge order book. It entered aviation business in 2006 with an order for 100 Airbus A320s.

This was followed up with an order for a further 180 in 2011 and another order of 250 aircraft last year with an option of 100 more. The airline had in May 2010 received approvals to import 150 planes (out of 180 ordered in 2011) and has imported 12 of these till this month.

"The current approval is to import 400 aircraft by 2025, which is over a ten-year period. They had applied for permission in December 2014 and have received inprinciple approvals for the same," said a senior civil aviation ministry official.

Confirming this, an Indigo spokesperson said that the approvals include 30 planes from the 2011 order and 250 planes ordered last year, with options to raise it to 350 if need arises.

Analysts, however, feel that such huge orders cannot be only to feed the Indian domestic market and the airline would be looking at cross-border joint ventures.

"IndiGo possibly has strong global plans, which could include cross-border joint ventures. I could see IndiGo brand in other international markets. Further consolidating and increasing scale reflects high level of confidence in their brand, business model and execution capability," said Kapil Kaul, India CEO of Centre for Asia Pacific Aviation, a Sydney-based aviation consultancy firm.

IndiGo-controlled InterGlobe Enterprises Ltd - a company owned by Rahul Bhatia and Rakesh Gangwal, former US Airways CEO - accounted for over 37% of the total passengers flown during February. With a fleet of 93 Airbus A320, the airline offers 613 daily flights connecting 37 destinations across the country.

It is the only carrier in the country to have made profits in the past six years. The airline's net profit for 2013-14 fell 60% to Rs 317 crore compared to Rs 787 crore in the previous fiscal.