Low cost carrier Indigo has signed a term sheet with French airframer ATR for 50 ATR 72-600 aircraft. The order would be valued at $1.3 billion at list prices. Deliveries of the aircraft will begin towards the end of 2017. Indigo will be able to reduce the number of aircraft on order depending on it’s commercial performance.
The order is a bold move by Indigo to reach out to smaller cities which do not have runways large enough to service the airline’s A320’s. Indigo has exclusively operated the Airbus A320 since it began operations in 2006. Indigo currently operates a fleet of a 133 Airbus A320 aircraft.
It also allows the airline to participate in the UDAN scheme and indicates a positive outlook on the market.
Aditya Ghosh, President, IndiGo
“In support of our Honourable Prime Minister Shri Narendra Modi’s UDAN vision, we are embarking on a journey to build a nation-wide regional network and connect cities that have not benefitted from the growth in Indian aviation. The ATRs low operating costs will help us build a large regional air travel network with reasonable fares. These aircraft will feature modern cabin interiors, thus making the flight a comfortable experience for our passengers. The ATR’s outstanding operational versatility, along with their capabilities to land in remote airports with limited infrastructure will help us manage our operations efficiently.”
With this move, Indigo will take on SpiceJet – on some of the regional only routes, especially the profitable monopoly routes (we discount Jet Airways as they seem to be moving away from ATR operations).
Additionally, low yield international routes like Chennai – Colombo, Kolkata – Dhaka, Delhi – Kathmandu can be flown with these aircraft which effectively helps with lower capacity and also lower costs. Trivandrum – Male may also be an option.
Bangalore Aviation had earlier covered AirCosta (Read: why AirCosta halted operations) and analysed the issues affecting the airline. None of those challenges apply to Indigo – given its cash position and wide network. Bangalore Aviation believes that Indigo is in a position to run regional operations that are far wider in scale than that seen in India earlier.
The challenge Indigo will face are threefold namely:
- Maintenance personnel
- Slots at metros and/or other airport constraints
All in all – the move has surely created buzz in the industry.