IndiGo mulls setting up separate regional subsidiary

[cyrilroy21]

NEW DELHI: The country's largest airline by market share IndiGo is understood to be planning to set up a regional subsidiary for connecting small towns using 70-80 seater ATR aircraft, a source in the know of the plan told ET.

According to the source, IndiGo promoter Rahul Bhatia met officials in the civil aviation ministry recently and discussed a plan to start a subsidiary company only to operate on regional routes.

When asked about the development over a text message, IndiGo President Aditya Ghosh termed it "false".

"In the backdrop of the government planning to allow airlines a bigger choice to service remote areas where they are comfortable with operating as opposed to forcing them to go to certain areas, IndiGo plans to start a regional carrier with 18-20 ATR aircraft to begin with," the source told ET, requesting anonymity.

IndiGo has a fleet of 63 Airbus 320 aircraft, which will increase to 100 by 2015.

IndiGo created history in January 2011 by ordering 180 Airbus A-320s with a list price of almost $16 billion (Rs 72,000 crore) to be delivered between 2016 and 2025. This is the single largest order ever in terms of number of aircraft by an airline globally. Delivery will begin after the 100 A-320s worth $6 billion ordered by IndiGo in 2005 — the highest so far by a startup airline globally, a record that still stands — join the LCC's fleet by 2015.


IndiGo mulls setting up separate regional subsidiary company; to operate using ATR aircraft - The Economic Times (http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/indigo-mulls-setting-up-separate-regional-subsidiary-company-to-operate-using-atr-aircraft/articleshow/18465755.cms)

[stiknruddr]

Just doesnt fit their business plan..

I'm all for it if this creates jobs and growth, but they have succeeded by following the Low Cost text book to the letter.
this will mess up their game and might lead them down the kingfisher path if they arent careful.

Why are things going back to license raaj era with govt deciding capacity and strategy for everyone.
:ugh::ugh:

[Johny Boy]

Indigo and ATR :eek::eek:

Jesus , Now every airbus pilot will feel low while those pondering move for bus rating will run after ATR.
If this news is proven right then lord save current ATR guys as new rush of ATR donkey's gonna flood the market soon.:*

[blackbirdsr72]

IndiGo, India’s largest airline by passengers carried, is planning to start regional operations by launching a separate subsidiary company.
Though IndiGo President Aditya Ghosh denied this when Firstpost sought his comments, highly placed official sources said IndiGo’s promoter Rahul Bhatia has conveyed as much to the Government. As of now, IndiGo operates 61 aircraft of the Airbus 320 family in a single class configuration, primarily deploying them on metro routes as a low cost carrier (LCC). There is no timeline yet for the subsidiary operations to begin but IndiGo is planning to place an order for up to 20 ATR aircraft in its bid to go regional.
[/URL]
And these plans would likely depend on the Government coming up with a new policy for regional connectivity, which is in the works. IndiGo’s thrust on regional operations could change the dynamic of domestic aviation. Six years ago, IndiGo was the newest kid on the block which began with a new fleet of the Airbus 320 family, offering low fares and on-time flights, fighting established competitors like Jet Airways, [URL="http://www.firstpost.com/topic/organization/kingfisher-airlines-profile-8864.html"]Kingfisher Airlines (http://www.firstpost.com/business/exclusive-indigo-to-start-separate-regional-airline-622818.html/attachment/an-indigo-airlines-aircraft-arrives-at-a-gate-of-the-domestic-airport-in-mumbai-16) (which has been grounded since October 2012) and Air India.
Despite tough competition, IndiGo consistently notched up market share to eventually become the number one airline in a matter of just about six years. Today, IndiGo controls more than a fifth of the domestic market and claims it is profitable when almost all other domestic carriers are steeped in losses and debt. Given its track record, competitors like SpiceJet and even Air India need to take notice if IndiGo is planning to go regional and begin operations with a fleet of 18-20 ATR aircraft.
What it has managed to do on metro routes may well be replicated on the regional front as well and this could spell trouble for others. As of now, SpiceJet has the largest regional presence, Air India operates such routes through its subsidiary Alliance Air while Jet AIrways also has some ATR operations. “False” is all Ghosh said when we asked him about plans to set up a subsidiary for regional operations.
But the news of IndiGo planning to begin regional operations and import ATRs comes at a time when the airline is embroiled in a skirmish with the Ministry of Civil Aviation for getting permission to import 16 A 320 aircraft this year, which form part of an earlier plan to import 100 aircraft for which in-principle approval already exists with the airline. Civil Aviation Minister Ajit Singh has permitted the airline to bring in only 5 of these 16 aircraft.
The source quoted earlier said that the minister is the new, final authority on aircraft acquisition and he has not seen it wise to allow IndiGo to import all 16 aircraft at the last meeting of the Aircraft Acquisition Committee. But the committee met again yesterday and perhaps some more of IndiGo’s aircraft requests would be cleared by Singh soon. According to a story in Mint newspaper last month, IndiGo added 19 aircraft to its fleet in 2012 and returned six after the leases expired. The story quoted consulting firm Centre for Asia Pacific Aviation as saying that IndiGo was the third largest in the world in 2012 in terms of aircraft capacity addition among low-fare airlines.
It also quoted an airline spokesperson saying the airline hopes to end 2013 with a fleet of 71 planes. IndiGo still has 209 aircraft on order with Airbus spread out till 2025, which means it can bring in an average 17 aircraft every year—pending the ministry’s approval. The Mint story had quoted an unnamed ministry official as saying that the ministry was working on guidelines that could make it mandatory for airlines to fly less-profitable regional routes.
“IndiGo, which doesn’t have smaller aircraft, may have to conform to these guidelines when submitting plans for the remaining 11 aircraft,” the story said. So is IndiGo’s plan to go regional under a new subsidiary a way to get the Ministry to approve more plane imports? This remains to be seen but IndiGo’s regional push may, once again, prove a game changer for India’s domestic aviation market.

IndiGo’s thrust on regional airline could be a game changer | Firstpost (http://www.firstpost.com/business/exclusive-indigo-to-start-separate-regional-airline-622818.html)

[PEC]

IndiGo and ATRs....Yeah I've been hearing this since 2011. Comes as no big surprise. Although, The pure premise looks to be against IndiGo's philosophy.:ugh:

I shall believe the rumor only when I see the First ATR in IndiGo colors, otherwise this shall only be a sensationalist story published by our ever-so-sensationalist media. :=Hey, that rings a bell. Didnt they predict something like 15000 pilots required in India, by 2015 or something? And we all know how that worked out.:ok:

[blackbirdsr72]

The Boeing 2012 Current Market Outlook India has forecast that the airline market in India will need 1,450 new airplanes worth $175 billion in next year 20 years.

so 1450 x 10 = 14500 pilots required for the next 20 years.......:)

Business Line : Industry & Economy News : Boeing bullish on airlines (http://www.thehindubusinessline.com/industry-and-economy/boeing-bullish-on-airlines-prospects-in-india/article4400610.ece?homepage=true&ref=wl_home)

[VT-ASM]

Just the sort of humour I was looking for this evening !
Unless GOI does something about the infrastructure and taxation, The report above would remain an elusive Atlantis.
I am also a bit skeptical about the regional hype because we did have quite a few players in the market..Vayudoot, Jagson, Archana airways, Spanair, Gujarat airways and most recently Deccan shuttles which lost money despite subsidies.The Spicejet growth story can continue as long as there is no over capacity in this untapped yet fledgeling market. for the regional plan to be a sucess I think we need more industries and infrastructure in terms of low cost airports and fuel taxation sops. As a pilot who'd be on the job market in the next two months, I do sincerely hope this would happen.

[PT6A]

blackbird,

1, That number does not take into account aircraft that will be retired from service (so although there will be more airframes it wont be the amount you quote)

2, Your Government is currently restricting how many aircraft airlines such as IndiGo can actually import.

3, The airlines in India like to enjoy the flexibility that expat contractors bring (so the total number of permanent positions will be reduced)

[blackbirdsr72]

PT6A & VTSM.......

Iam not so optmistic on the numbers... Maybe an entertainment.....
But Iam sure that the Aviation Market in India will expand. No doubt about it.
when Indigo launched in 2005 the numbers were like 14 million Pax per annum. Now it has increased to 64 million......Imagine after 5-10 years...

So yes Maybe the numbers are wrong and many new players may go into history like Gujarat, MDLR, Archana, KFA etc etc.... But I hope there might be atleast 1 like Indigo or spiceject will come up.......

Regards

[stiknruddr]

@blackbird...
I laud your positive thinking.

the problem is that the sector is over regulated, over taxed and lacks infrastructure.

until these 3 things change, it will keep limping along.
if they stop thinking of it as a rich peoples transport and a cash cow, and open it up, then we might see some action, but until then, indigo or not, more regional operators or not, indian aviation is going to keep struggling.

Regarding indigo and atr, i have already posted my views above.

why is govt forcing existing guys to change their business model.
let regional guys open up with 2-3 planes and serve the smaller airports. allow fdi in the airports all over the country and earn revenues by commercializing the real estate at these airports.
allow fdi in new regional carriers too.keep them out of new national carriers if you want to prevent overcapacity.
open up the sector to competition and it will explode with revenues for the govt in the form of taxes from the business generated and income taxes of all the people that will get employed.
the Indian railways is saturated and cannot move all the people that need to travel.
low cost regional travel will take off if it is enabled and encouraged.

[billboard]

The average fleet age of the so called LCCs in India is less than 5 years, for Air India it is 8 years and for Jet it is 6 years. So the average fleet age of the all the airlines in India can be approximated at around? Lets say 6? The projection given by Boeing is for 20 years. 20/6 = 3.67. So a fleet of X number of aircraft will be replaced 3.67 times. Now X = 1450/3.67 = 395. New addition of aircraft after 20 years = 395.

New jobs created over 20 years = 4000 approx.

Things to remember:

1) Half of those 4000 jobs will be for experienced commanders i.e. expats and ex-military guys. So new entry level jobs that will be created over 20 years = 2000 .

2) There are already more than 5000 unemployed CPL holders in the market. New licenses issued in the last 6 years = 6000 approx. So 1000/yr.?
So we could have about 20,000 new CPL holders chasing 2000 new jobs over the next 20 years.

3) There is a recent trend of people going for type ratings without any job guarantees. I wouldn't be surprised if in future a quarter of all unemployed CPL holders will also hold a T/R. So we might have 5,000 type rated and 15,000 non type rated CPL holders chasing 2000 new entry level jobs over the next 20 years. :{
____________________________________________________________ _______________________

The above calculation is obviously very crude. The objective was to enunciate the fact that there are so many factors behind those rosy numbers that aircraft manufacturers and flight schools( and their agents ) do not tell you. :E

The irresponsible journalism by Times of India alone has put so many families under financial stress. Remember how back in 2007 they were giving out figures of thousands of pilots being required by the year 2012. The year 2012 has come and gone but the debts have stayed back with those sitting unemployed.

Selling dreams is a very profitable business and flight schools specialize in it. ;):eek::yuk:

[blackbirdsr72]

Selling dreams is a very profitable business and flight schools specialize in
it. http://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/wink2.gifhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/eek.gifhttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/pukey.gif


I like it mate........!!!!!:)

[billboard]

^ I am glad buddy.:)

[sierra910]

I really hope DGCA, India can do something about the situation of the unemployed pilots in India...Now that AirAsia is coming up and IndiGo is setting up an ATR division and all, may be DGCA should come up with a some clause (asking them to employ as many new bees FOs as possible) along with the approval letter for the new operators.
*not all of us can rap and come up with a (kinda) viral youtube video you know.