Country’s biggest carrier IndiGo facing challenges as competitors emerge: Report

New Delhi:

It is the largest airline of the country and has been ruling the Indian skies for a long time. But as the aviation sector slowly returns to normalcy after two years of pandemic-induced carnage, IndiGo is facing heat from competition, fueled by staff problems, top management changes and a fleet diversification. has become complicated.

According to analysts, just as it managed to resolve a public tussle among its promoters, IndiGo is now battling better offers with employees, slippage on its on-time performance (OTP) and some technical glitches.

IndiGo had a domestic market share of 57.7 per cent in September, more than 1600 daily flights and 279 aircraft, but of late, OTP declined from 90.1 per cent in April this year to 84.1 per cent in September.

In February 2020, before the pandemic, the airline had a market share of 48 per cent.

As Indian skies opened up and air traffic began to rise, IndiGo saw a change in chief executive officer (CEO), with Ronojoy Dutta stepping down ahead of his term, which was to expire in January 2024. Now, Peter Albers is at the helm as CEO.

While there was no official word on the attrition in budget carriers, people said many workers are leaving jobs, especially as opportunities arise as the global aviation space recovers from the pandemic.

With regard to human resource (HR) policies, an IndiGo spokesperson said that the airline has established a strong culture of managing talent in support of expansion, growth and succession planning.

“We have also resumed hiring for roles in digital, IT, finance, human resources, and sales as well as corporate functions such as airport operations, customer service, and security functions. We have reduced the salaries of all our employees. have also restored to the pre-COVID level,” the spokesperson said.

As of the end of March 2022, IndiGo had 26,164 permanent employees, which included 3,791 pilots and 6,398 cabin crew.

In July, discontent emerged among some sections of the airline’s employees as a large number of employees were called sick, resulting in massive flight delays.

During the pandemic, the airline had cut pilots’ salaries by up to 30 per cent.

One employee said the carrier’s revenue model and growth strategies are good, but policies need to be properly implemented in a more transparent manner.

Many people are leaving the airline, especially from the support teams, because the aviation industry has better opportunities with recovery, the employee said on condition of anonymity.

The carrier’s workforce declined to 23,711 in the financial year 2020-21, which was also the time when the pandemic hit the aviation sector significantly. In 2019-20, the count was 27,812.

The turnover rate of the airline’s permanent employees was 15.98 per cent in 2021-22, while it was 22.9 per cent in 2020-21, up from 14.30 per cent in the previous fiscal.

The airline’s loss widened to Rs 1,583.34 crore in the September quarter due to higher fuel costs and foreign exchange losses.

In the last three-four years, IndiGo had dominant positions and there was very little competition. Also, the entire industry is facing issues regarding OTP as more aircraft are flying and air traffic has increased. OTP is affecting every airline, but it is more visible when one player has huge operations, pointed out an aviation industry analyst.

According to official data, IndiGo carried 59.72 lakh passengers out of over 1.03 crore people flown by domestic carriers in September.

Another aviation industry analyst said IndiGo has gone from being just a point-to-point carrier to a network carrier with its own challenges like waiting for passengers and baggage to connect.

This sometimes had to be done at multiple terminals, such as Delhi or Mumbai, affecting timelines that are beyond the carrier’s control. This also adversely affects OTPs, the analyst said.

Now, with Air India set to consolidate its low-cost airlines – Air India Express and AirAsia India – into a single entity, and with Akasa Air also taking off, the skies for IndiGo are becoming more competitive. With the restart of Jet Airways, competition will increase.

Regarding competition, the airline spokesperson said that India is growing as one of the world’s largest civil aviation markets as it enhances capabilities and capability in infrastructure and services.

“Currently, IndiGo is operating 1600 flights a day, capturing more than half of the domestic market share, and has 11 new domestic destinations in our network while working towards increasing our share of international operations. have pairs.

“We will continue to expand our domestic and international network and enhance engagement with our passengers to enhance their travel experience and provide them with unparalleled services with maximum connectivity and timely performance,” the spokesperson said.

There have also been incidents of misbehavior with IndiGo employees in the recent past. In May, Ronojoy Dutta, the then CEO of IndiGo, expressed regret over an incident at the Ranchi airport where a specially-abled child was stopped from boarding its flight to Hyderabad because he was in a “state of panic”. “I was in.

In the wake of the pandemic, many employees had to lay off and now, there are concerns about job security, which was not there before the pandemic, claimed the employee who was quoted earlier.

There is also an overhang of feud between IndiGo’s founders – Rahul Bhatia and Rakesh Gangwal – which came out publicly in 2019. On September 8, Rakesh Gangwal and his wife sold a 2.74 per cent stake in the airline for Rs 2,005 crore. ,

In February 2022, Rakesh Gangwal resigned from the board of IndiGo’s parent InterGlobe Aviation and also said that he would gradually reduce his stake over the next five years.

Many changes have also been made in the top management.

A former IndiGo employee, who had served in a senior position, said the carrier had two strong pillars – Rahul Bhatia and Rakesh Gangwal – but when they had a tussle, the entire management set up at IndiGo was affected and around that . Time, the coronavirus pandemic happened.

Kapil Kaul, head of aviation consultancy CAPA India, said IndiGo has a very large and complex operation, but he does not see anything dangerous. “However, security oversight and monitoring should be increased across the industry when security issues emerge. We need an institutional response to security.” According to him, the engine-related issues have stabilized from the safety point of view and they are now facing the impact of supply chain disruption, but otherwise IndiGo has arrangements.

Among other incidents, recently, the engine of IndiGo’s Bengaluru-bound aircraft caught fire at the Delhi airport. Aviation regulator Directorate General of Civil Aviation (DGCA) is probing the incident.

Aviation industry veteran and analyst Captain Ranganathan said IndiGo’s operations are quite safe but there seems to be an element of getting bigger in size.

On the equity front, the company is offering substantial returns to the investors. The stock, which was listed on November 10, 2015, has risen nearly 103 per cent on the BSE as of October 31 this year.

However, so far this year the performance has been muted. Shares of the company have fallen nearly 12 per cent as of October 31, 2022, while the benchmark BSE 30-share Sensex has gained 4.27 per cent during the same period.

On Friday, the company’s shares closed flat at Rs 1,797.60 on the BSE.

CEO Peter Albers said, “We are on a stable path to benefit from the enormous opportunity in both domestic and international markets. With the industry challenged by global supply chain disruptions, we are taking various counter measures to accommodate this strong demand. working on.” Friday’s quarterly earnings call.

IndiGo started its journey in August 2006 and during this journey of more than 16 years, some airlines including Jet Airways and Kingfisher Airlines have also closed their business.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)