India’s largest airline by market share, IndiGo today confirmed it has further placed an order for 300 Airbus A320neo family aircraft and the total deal is valued at a whopping US$ 33 billion (Rs 2,31,000 crore).
This is the largest order Airbus has ever received from a single airline. The A320neo family includes the A320neo, the A321neo, and recently launched A321XLR. The airline already has more than 90 A320neo in its fleet today along with 6 A321neo. The aircraft has proven to be extremely efficient for the airline and was an obvious choice for them considering their previous orders.
However, the most interesting part of this deal has to be the A321XLR. Previously, there were reports that IndiGo might consider ordering a wide-body aircraft like the A330 to fuel its long-haul international operations. However, the airline is sticking to a narrow-body fleet right now and the A321XLR being the world’s longest-range single-aisle aircraft is a natural choice.
Interesting points about this firm order:
- IndiGo will cross the 250 aircraft mark anytime in the coming weeks and has maintained a uniform fleet configuration since inception. This offers maximum efficiency across the network and perfectly compliments its low-cost model. Right now, it’s the 6th largest airline and second-largest low-cost carrier in Asia.
- Keep in mind, the incoming A320neo aircraft will not only help expand the fleet but also replace older aircrafts. The company maintains a young fleet with an average age being less than 6 years. This ensures maximum efficiency as expensive checks like a D-check can be skipped.
- This isn’t the first time IndiGo has placed such a massive order. The airline has previously ordered 100 A320-200 and then 250 A320neo. It later converted the second-order into 125 A321neo units, a longer aircraft that can carry more passengers per flight.
- The A321XLR is similar to the A321 but has more range. It can fly up to 4,700 nautical miles (8,700 km) in one go. Since IndiGo is a low-cost carrier, it’ll stick to a one-class configuration and carry more than 200 passengers. Though, this might prove to be a passenger experience disaster because you may have to endure flights up to eight hours in a 3×3 configuration with just 3 washrooms.
- The A321XLR will open up impossible routes like Delhi – London, Delhi – Tokyo, Delhi – Moscow, and more for IndiGo. From India, this will completely open up the markets of south-east Asia, a huge chunk of Africa, and Europe. IndiGo already has closer-by destinations covered in the middle-east, Thailand, and even Vietnam. However, the airline hasn’t been able to smoothly expand further to even medium-haul destinations like Istanbul. Recently the airline was in the news because it couldn’t load passenger baggage due to severe headwinds, making it harder for them to carry the load. These seasonal factors have proven that the current fleet will not be able to fuel its European dreams.
- Using its vast domestic network, the airline can successfully build a feeder network for its hub airports of Delhi, Mumbai, Bengaluru, and Kolkata. In turn, ensuring that its domestic, as well as international network, runs smoothly.
- The airline hasn’t decided which engine option it’ll choose on the new order, yet. The current fleet’s A320neo is powered by Pratt and Whitney’s PW1100G engines and they’ve been a major thorn because of frequent shutdowns. In fact, DGCA asked the airline to replace engines on 16 aircraft within a 15-day period; practically a herculean task. These repeated setbacks forced the airline to go for CFM engines for the rest of the planes that are yet to be delivered from the previous order.
Why is the A321XLR better than a wide-body aircraft?
- Two decades back, aircraft makers assumed that airlines would have better efficiency if they made larger aircraft that can carry more passengers. In response, Airbus created the A380 Superjumbo jet and sadly, the plane has been a commercial failure. Operating huge aircraft is extremely costly and they can only be deployed on exceedingly busy routes like London – New York.
- Larger planes require more upfront capital for acquisition and route demand matters the most. Hence, airlines soon started shifting to smaller, but huge-enough aircraft like the A350 that can carry sufficient passengers and can also be deployed on relatively low-demand routes. The latter turned out to be more efficient because airlines can quickly deploy them on new routes or exit existing ones.
- Similarly, when compared to a wide-body, the A321XLR provides airlines with much-needed flexibility. In the Indian market, it can be quickly deployed to cover routes from Tier 2 cities to international destinations, while carrying at least 220 passengers in one go.
- India is also a developing market and IndiGo can very well gauge the response to a particular route perfectly. If in the future, demand rises organically, the airline can always reconsider ordering a wide-body aircraft. But, for now, a narrow-body is sufficient. These small steps ensure the airline continues to remain profitable or reduces operational costs and doesn’t end-up like Jet Airways or Kingfisher.
US airline Southwest was the first airline to follow a low-cost model. After seeing its success, EasyJet, Ryanair, AirAsia, and more were born. India is predicted to be the fastest-growing aviation market (even though it has slowed down this year), and IndiGo is at the top right now.
The airline is known for its efficient operations and has more than Rs 18,000 crore in cash. With even higher ambitions, it’s the only airline Indians can look up to. Hopefully, it isn’t overly optimistic in calculating India’s domestic demand.