IndiGo had an impeccable record of not closing a station for over 18 long years, nearly similar to not having operational meltdowns. Both have now been challenged. While it faced operational blip pre-COVID, the station closures were never a reality until it announced the closure of Copenhagen, which it launched last year in October. Copenhagen now joins Chengdu and Yangon as IndiGo’s cancelled destinations. While IndiGo returned to China, it did not return to Chengdu, but the destination in itself was closed due to the pandemic and presumably the market post pandemic being different than the past, while Yangon clearly is the fall out of the coup in Myanmar. The dust over Copenhagen isn’t settled but flight trackers on social media have dug in to find out that IndiGo has pulled out flights from Krabi this summer, along with reduction of flights to Langkawi.
IndiGo had breakneck expansion last year adding multiple new destinations and adding widebody aircraft on wet-lease to launch new flights, beyond Istanbul where it was already operating Turkish Airlines aircraft. The dimensions of Norse Atlantic Dreamliners seem different from those of Turkish Airlines. While Turkish Airlines planes are used exclusively to fly to Istanbul, where IndiGo also feeds into the large Turkish network, the planes have long ground times in Istanbul enabling maintenance, crew management, etc at the hub of Turkish Airlines to whom the planes belong. The Norse Atlantic ones on the other hand are different with a commitment for 350 hours a month and additional money thereafter.
Bengaluru has been the leisure hub for IndiGo, a gateway which it used to launch flights to Denpasar Bali, Mauritius, Langkawi, Krabi, Phuket amongst others. To Bangkok, IndiGo saw competition from Air India Express, while to Phuket it saw Akasa Air come neck to neck. Krabi, which has much lower demand and an untapped market (depending on how one wants to look at it), is a monopoly. Last season, IndiGo reduced operations between Krabi and Bengaluru and replaced that with Delhi – Krabi flights, while continuing to operate to Krabi from Mumbai, which connected to the European flights of IndiGo.
Indian Rupee has weakened against the dollar over the last year or more. Airlines have been impacted with both IndiGo and SpiceJet forced to call out Forex as a major component and going to an extent of reporting the results without Forex losses to show how they were profitable, had it not been for the falling rupee. As airlines try to buffer the currency shock, it now seems that they will be impacted in more ways than one.
The Rupee is weaker by 5% in the past year and 10% in the last two years. A foreign holiday is thus expensive even without inflation in the foreign country. Consider inflation and the same hotel is now up to 20% more expensive to book now than what it was in say 2024. Coupled with the increase in prices of other things like food, alcohol and sight seeing, the cost of a holiday has gone up anywhere between 10-15% in the last one year.
The weaker rupee is not the only problem. India may be looking at high growth rates compared to other countries but the fear of Artificial Intelligence taking over jobs, uncertainty in increment cycles in the IT sector and overall tough times in IT have put additional pressure on the typical travellers who enjoyed weekend gateways or short breaks on the back of five-day work week, higher disposable income and great salary hikes year over year.
Couple these two and voila! We probably have an answer on why there could be pressure on airlines in general and in this case IndiGo in particular leading to what looks like a pull out from the market. If the flights are not reinstated, we are staring at a sudden loss of stations – a track record broken in case of IndiGo. Uncannily this comes around the 18-19 year mark of existence of IndiGo. It was around 2012 when Jet Airways faltered, around the same mark as IndiGo.
Aviation as a business is cyclical in nature and the tide turns faster than one can imagine. Post the US-India trade deal, there have been FII inflows again which have stabilised the rupee, the long term India growth story remains intact and the middle class keeps increasing each year giving opportunity to fly to newer places. The key is balance and how it will be maintained which will dictate what the future holds for not just IndiGo, but also the other carriers.
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