Last Friday, when IndiGo announced its Q3-FY25 results, one of the things discussed was the expansion of IndIGoStretch, its business class product. Pieter Elbers, the airline’s CEO, said that the airline will expand this product to flights between Delhi and Chennai soon. The airline aims to have 45 dual class aircraft by the end of 2025 covering 12 routes.
This set out a chain reaction amongst long time industry trackers, analysts and the most from city specific groups. The obvious questions were “Why not
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In the service industry in general and aviation in particular, one problem can have multiple answers and there can be more than one right answer. As a student of aviation, with access to some numbers and ability to decode a few others, I decided to explore the rationale behind this decision. With the merger of Vistara into Air India, IndiGo has lost the leadership position on Delhi – Mumbai and Delhi – Bengaluru routes in terms of frequency to Air India and some other metro routes, it is neck to neck.
Delhi centric
One of the first things that I notice is the rotations being Delhi centric, for even the current routes to Mumbai with ability to swap them easily. This is a subfleet and cannot be swapped with the main fleet at will. In its early days, IndiGo planned its rotations such that the aircraft would end up in Delhi at specified intervals to ensure maintenance, which was restricted at Delhi, back then. Later, the airline expanded this capability and at the same time, the OEM also increased the time intervals.
This has two angles, one is maintenance and the other is commercial. Old time trackers will remember how the airline had advertised “Sleep with your wife” in Delhi when it had a day return product available for all metro cities ex-Delhi. The airline is probably going to replicate the strategy (and not the advertisement) with a Business class product to every metro from Delhi coming up first before they are joined later. This helps with Point of Sale driven Sales. This means Delhi to Hyderabad / Kolkata / Chennai will have higher priority over Mumbai – Bengaluru / Chennai / Kolkata or Bengaluru – Kolkata and so on.
If this is the right path, we now have options like Delhi – Kolkata / Hyderabad or Chennai.
Why Chennai and why not others?
This is actually the tricky one because we have now taken aside the other routes, we are left with three routes from Delhi where it can deploy the Stretch. In this case, let us look at the market by frequency. The Delhi – Hyderabad route sees three players compete with IndiGo having 85 weekly flights, Air India 84 weekly and Akasa Air 14 weekly flights. On the Delhi – Kolkata sector, IndiGo and Air India are neck to neck at 77 weekly flights each while SpiceJet has 7 weekly flights. On the Delhi – Chennai sector, it’s a duopoly with IndiGo and Air India at 70 weekly each. This data is sourced from Cirium, an aviation analytics company.
Air India deploys the former Vistara three class aircraft to Hyderabad while it relies on its legacy planes to operate to Kolkata and Chennai. After trying to pitch the Stretch as a product against the Vistara three class configuration, does IndiGo want to pitch it against legacy Air India to get a better foothold in the market? It could be one of the reasons.
Terminal conundrum
Unlike Air India, IndiGo operates from multiple terminals at Delhi. IndiGo also feeds passengers to its own international network and codeshare partners. Which partners get feed from where is not in public domain and in an event where more premium passengers are bound for Chennai over Kolkata on IndiGo, offering those flights with good load for the front cabin makes more sense.
Yields & Traffic
While we eliminate one point over another, projected yields and traffic is equally important if not the most important to select the station. The yields for business class traffic to Delhi, the longer route seeing higher traction from passengers to upgrade and a newer plane as compared to Air India’s legacy aircraft would be part of the combination which could have led IndiGo to Stretch it to Chennai over Kolkata. The market size for Delhi – Kolkata and Delhi – Chennai is in similar range on the Per Day Each Way basis (PDEW).
Anything else?
A very small possibility is the impact of Route Dispersal Guidelines. With Delhi – Chennai being a long route under Category 1, the airline has to deploy a 10% of Cat 1 ASK on Cat 2 and 1% of Cat 1 on Cat 2A. When a dual class aircraft is deployed, replacing a 232 seat A321neo, there is a reduction of 12 seats per flight, translating to a reduction of 5% by ASK per flight. When aggregated across 140 two-way flights in a week, it gives the airline some leeway. If the airline has plans to pull out some capacity from either Cat 2 or 2A routes temporarily, this could be one of the factors.
Tail Note
These are early days of IndiGoStretch. The airline has officially said that they have received a great response to the product. Random searches for flights within 24 hours have more often than now shown high availability. With 45 planes and 12 routes, IndiGo is possibly not thinking of adding Stretch on routes from Navi Mumbai and Noida International at Jewar, since the calculation does not match. The airline definitely has time to expand its count of dual class planes and thus offerings.
While the airline has changed by leaps and bounds, it remains stuck to some of its early thought processes around simplicity, one being lack of ovens and the other being keeping things simple which has made it offer only one type of meal in the Stretch cabin. How this works out and which would be the future routes? Do the readers have any guesses?
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