IndiGo, India’s largest airline by many counts, including a 55% domestic market share as of the time of writing this report, has started to work on its next aircraft order.
IndiGo’s aircraft orders so far
IndiGo placed its first aircraft order for 100 A320ceo aircraft in June 2005, making news as an upstart airline then with a large aircraft order being placed. Since then, many A320 family orders have been placed, including a second MoU for 180 A320neo aircraft placed in 2011, followed by another A320neo aircraft in August 2015. Subsequently, Airbus received another order for 87 A320neo and 213 A321neo/XLR aircraft in 2019, taking IndiGo’s total number of A320 family aircraft on order to 830.
IndiGo is now operating 300 narrow-body aircraft already (apart from their one damp-leased 777 from Turkish Airlines), mainly including A320/321neo aircraft and 39 ATR turboprops.
Why does IndiGo order so many aircraft?
IndiGo usually prefers to take brand new aircraft for which it negotiates the best terms with the manufacturer (perks of being one of Airbus’ biggest customers). At the time of delivery, they have a lessor buy the jet from them (IndiGo) at a potentially higher price and then rent the plane from the same lessor. This is the practice called Sale and LeaseBack (it all happens back-to-back) and helps IndiGo raise significant cash every time they take delivery of an aircraft with this model.
But the leasing model also helps IndiGo in another way. Back in the day, IndiGo used to collect brand-new aircraft, use them for six years, and then send them back to the lessor, who would lease them out to some other airline. Given the supply chain problems and Covid-19 and so on, this model is no longer as pure, with IndiGo holding on to older aircraft as well right now.
So, to keep this pipeline milling of replacing old aircraft and their costs low, IndiGo needs new aircraft, apart from the obvious other moves, to expand the number of flights they can offer and hence, their market share.
IndiGo is working on its next orders.
While a comically written (and erroneous) report attributed to IndiGo another 500 aircraft order, IndiGo is currently working on its next orders. They need to do so now because, due to massive demands, Airbus and Boeing are sold out on their narrow-body products (the A320 family and the 737 MAX, respectively) far out into the late 2020s.
For reference, as of January 2023, Airbus had 16,729 orders for their A320 family (A320/A321/A319/A318), out of which only 10,628 were delivered so far, making a backlog of 6,100 aircraft to be delivered. This does not even include the mega Air India order. It would take Airbus a decade to deliver these orders at the current production rate of 50 aircraft per month (slated to go up over the next two years to 75 per month).
So, to capture the slots ten years down the line, IndiGo needs to act now. In fact, Bruno Le Maire, the French Finance Minister who was recently in India, indicated that IndiGo could order these aircraft as soon as Paris Airshow 2023.
IndiGo examining Boeing aircraft and wide bodies
Aditi Shah of Reuters, one of the best correspondents on the aviation beat, now reports that IndiGo is doing a playoff between Boeing and Airbus for the next set of their narrow-body aircraft. It could eventually be a negotiation tactic, but it could also mean that at the right price, IndiGo might be tempted. The Reuters report puts the figure at 500 aircraft, which could quickly steal the limelight away from Air India’s recent order of 470 aircraft.
But interestingly, she also states that IndiGo is also checking out the A330neo and Boeing 787. The A330neo is the current unsung hero of the Airbus offering, with an excellent capability to fly mid-haul missions with ease and economically. So, it might not be a surprise that IndiGo is examining its options and might go for something if it sees an opportunity internationally or even on some domestic segments.
Bottomline
IndiGo is getting set to order its next batch of aircraft, and this time around, there could also be some wide bodies in the mix. The airline might be ready to place its orders by Paris Airshow 2023. Reporting puts the order size at about 500 aircraft, which in its current shape, could outnumber the most significant aircraft order yet, by Air India.
What do you think will be the final number for IndiGo’s next aircraft order?
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Ajay, Do you know when the last of the 830 aircraft Indigo has already ordered are set to be delivered? Also, there’s news that almost 50 aircraft are grounded due to lack of spare parts, so, Indigo is essentially only able make do of 250 aircraft of their 300 plus fleet.
Do you have any details of Indigo’s expansion plan and how long they have the 777s on damp lease?
@Anumit, no such date about when their last aircraft will arrive. Depends on various factors on IndiGo and Airbus’ side. But given there are many such aircraft left (about 500, per recent news reports), and at a speed of 4 inductions a month (48 a year), they are sorted for a decade. As for the 50 grounded aircraft, they cannot do much. PW needs to replace the engines, and again, supply chain issues strike. The 777 are on damp lease for a period of a year.