BLast year it placed the world’s largest commercial aircraft order for 500 Airbus A320 family narrow-body jets. In this case, Indigo once again made the aviation world look up. Airbus recently ordered 30 A350-900 aircraft.
Deliveries will begin in 2027. In addition, IndiGo has options to purchase 70 aircraft of the A350 family.
India’s largest airline, one of the world’s largest budget carriers by passenger numbers, has now clarified its intentions with this latest directive.
After ruling the Indian skies, the big dream is to make a global mark with non-stop, long-haul flights from Indian airports. There is a problem though.
Wow Air, Norwegian Airlines, Thomas Cook, Air June, XL Airlines and many other carriers have failed at the long-haul, low-cost airline model.
Others in the segment, such as AirAsia X, are struggling.
Despite some lucrative long-haul budget operations including Scoot, Jetstar, Cebu Pacific, Tui, and French Bee, it’s an area full of risks and unknowns with more mishaps than happy landings.
What makes this segment a largely unsuccessful frontier, and what can IndiGo do to plant its flag and build a successful long-haul product and network? There are no easy answers,
Low cost carriers
The basic business principle of low-cost carriers (LCCs) is to minimize direct costs, at least in theory, to offer low fares and fill aircraft.
While still making a profit. On the other hand, a cost increase limits the pricing power of LCCs, thereby narrowing the gap with full-service carriers (FSCs).
One of the main factors making low-cost, long-haul operation difficult to operate and sustain is high fuel costs compared to short-haul hops.
This means that airlines flying long routes with larger aircraft have relatively less control over fuel costs.
They are determined by international oil prices, which have a disproportionately large share in the price structure.
The latest widebody aircraft, such as the A350, are more fuel efficient than previous-generation aircraft, but the jury is still out on whether they can sway the bell in favor of low-cost, long-haul air travel.
Operating narrow-body jets is a specialty of major LCCs worldwide, but wide-body aircraft are the most expensive. And the new generation of widebody aircraft is even more so.
There are high costs involved in operating wide-body aircraft because of the sheer length of the journey and the need for additional manpower—cockpit and cabin crew—due to rest and fatigue management requirements. Budget carriers thrive on fast turnaround times and high capacity utilization levels, and achieving these on a consistent basis in long-haul operations can be challenging. Additionally, maintenance and repair costs for wide-body aircraft are high and lead times are long.
Networking skills
Aside from cost efficiency, network planning is the big differentiator when it comes to success and failure in commercial aviation. It is often the products and pricing of an airline that attract the most attention in the public eye.
Meanwhile, its network strategy and development is fundamental to how it fares both operationally and financially. In the case of low-cost, long-haul airlines, the importance of network design is further emphasized.
An airline’s network design is shaped by many factors, including demand and competition, so there is no single winning formula. While each airline’s network has some unique features or peculiarities, aviation industry experts point to some common elements in the network designs of relatively successful long-haul, low-cost carriers.
As with successful short-haul LCCs, these components involve operating more routes with few or competing airlines and lower overall flight frequencies, rather than entering competition-heavy, high-frequency routes. Operating from multiple hubs or points instead of one large hub may be a better network design for LCC operations even in the long-haul segment.
In other words, the global experience of successful LCCs is that they tend to do better financially with point-to-point networks and focus on serving latent demand and stimulating it in less busy ways. And often, they try to get to and from cheaper secondary airports rather than major airports.
Of course, there will be exceptions due to factors such as demand levels in source markets, fleet strength, geographic spread of the airline’s home country, airport infrastructure, and domestic and regional airline markets and regulations.
Low cost with few embellishments
Low cost product positioning is also important. A barebones, no-frills product without too many features and amenities can do the job for short flights. But when it comes to long-haul flights, flyers are reluctant to opt for such a product. And upgrading the aircraft with more amenities, be it charging sockets, comfortable seats, in-flight entertainment (IFE) and stoves to run hot food service, certainly adds to costs.
Different airlines use different solutions and innovations, some of which do not fit well with what low-cost airline products have traditionally represented. Many in the industry are now calling it hybrid products that offer a combination of LCC and FSC features.
There are carriers that have introduced dual-class cabins that offer business class or premium economy seats and services at a higher price. Some offer amenities such as in-flight entertainment, power outlets and hot meals for economy-class passengers as part of the standard offer or as an additional cost requirement.
Some of these airlines also offer the option of all-inclusive bundled fares, where passengers pay extra for everything from seat selection to baggage allowance to in-flight food and beverages, in addition to standard LCC practice.
IndiGo’s long-haul route
IndiGo has not yet commented on the routes the A350s might be deployed, their cabin configuration and the amenities the airline might offer on its wide-body product. In a recent investor call, IndiGo CEO Peter Elbers said all options are open and decisions will be taken at the right time based on the evolving needs of Indian air travelers and the country’s aviation landscape.
With deliveries of A350s set to begin in 2027, IndiGo still has time to finalize its network strategy and design and the long-haul product it wants to offer. The airline did not disclose details on either figure, but there are indications of the broader direction it could take.
On the product front, there are signals that IndiGo may move to a dual-class cabin configuration, which other successful long-haul LCCs have done. Because some seats, such as premium economy or business class, come complete with certain bundled services—sold for significantly more than regular economy class seats—airlines can generate additional revenue, which helps them offer lower fares to fill the remaining cabin. . IndiGo currently offers all-economy cabin on all its flights.
As for IFE, the airline is already conducting trials on the Bring Your Own Device (BYOD) basis on the Delhi-Goa route. It will be interesting to see if it will graduate to seat-back screens on its A350s like Paris-based long-haul LCC French Bee. Will there be charging points on board and will Indigo finally start serving hot meals? These are among the questions the airline will answer closer to the induction of the A350s.
Coming to plans for IndiGo’s network design, Elbers said IndiGo wants to offer direct international flights from multiple destinations in India, apart from the top-tier airports of Delhi and Mumbai. This plan appears to be consistent with the multi-hub network designs of successful long-haul LCCs. Given the growing demand for international travel and IndiGo’s strong domestic and short-haul international network, this model can serve the airline well in long-haul operations with strong potential for domestic and international connections.
Over the last two years, IndiGo has been pushing its international network expansion to the extent possible through its short-body fleet.
But instead of entering highly competitive and busy routes, the airline is focusing on identifying underserved routes and routes with latent demand.
And for some it stimulates the need. This, again, is a strategy that has worked well in many LCCs’ long-haul operations, and there are clear signs that IndiGo may stick with it in shaping its long-haul network.
