How Much More Can IndiGo Grow?

Indian low-cost giant IndiGo is continuing its expansion in 2021, adding a series of new bases and its 63rd domestic destination. Alongside, its fleet of A320neos grew considerably, making it Airbus’ biggest customer in 2020. But how much more can IndiGo continue to grow?

IndiGo 1000th A320neo
How long can IndiGo sustain its current levels of growth? Photo: Airbus

Larger market

While India might be the third-largest aviation market globally, only a small part (around 10%) of India’s massive population currently travels by air. Historically this has been both due to cost and convenience, but as air travel continues to expand across the country, many may choose to take shorter flights rather than lengthy road or train journeys.

Airbus estimates that the share of Indians traveling by air will double to roughly 20% by 2038, giving India a huge growth opportunity. Assuming a successful vaccine rollout in 2021-22 is able to reopen travel, we could see India return to over 7% yearly growth. This means India can expect a significant market expansion in the coming decades.

India domestic flight resumption
Traffic is expected to grow at over 7% once travel demand recovers. Photo: Getty Images

For IndiGo, this expanding market will mean more opportunities to capture traffic and retain its place as the country’s leading carrier. India is also a notoriously price-sensitive market, which allows IndiGo, and its low-cost rivals to dominate the domestic market. This isn’t expected to change anytime soon, even with the expanding market, aiding IndiGo’s growth.

Going regional

IndiGo’s recent announcement of seven new bases across regional and Tier-2 airports around the country could signal the airline’s long-term plans. Moneycontrol notes that IndiGo’s choice to open multiple bases instead of growing larger bases at hub airports is a change in strategy for the airline. With economic growth seeing more demand for air travel arise in smaller cities, indiGo could be seeking new opportunities.

IndiGo A320neo
IndiGo has taken to adding more bases in recent months rather than concentrating operations at hubs. Photo: Airbus

The seven bases will open between February and May of this year, with IndiGo being the first or only second airline to start services to some cities. While it’s too early to see if this regional expansion will work, IndiGo seems to doubling down on it.

International

While international flights may seem like a distant memory right now, IndiGo could have some big growth plans internationally. 2023 will see the rollout of the Airbus A321XLR, the longest-range narrowbody on the market. The plane will allow IndiGo to reach new destinations across Asia and fly to Europe for the first time, opening a whole new market segment for the airline.

While the history of low-cost, long-haul airlines is bleak (especially with Norwegian’s recent shrinking), the A321XLR’s much lower cost of operation could dramatically shake up the market. For IndiGo, this would mean much more range and passenger traffic.

IndiGo A321XLR
The A321XLR could be a game-changer for IndiGo’s future plans. Photo: Airbus

Overall, IndiGo has much to look forward to in the coming decade. As the pandemic recedes, there is room for growth as Indian aviation and the larger economy continue to thrive.

What do you think about the future of IndiGo? Let us know in the comments below!


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