Despite the well-documented challenges, airline bosses won't give up on the low-cost, long-haul dream. Will IndiGo be able to pull it off?
Low-cost airlines, the pioneers of brief discomfort at bargain prices, have struggled to master long-haul flights. Now one of the world’s most successful budget carriers is considering cut-price business class seats as a way into the Europe-Asia market.
India’s IndiGo, which currently flies as far as Istanbul, is mapping out an ambitious long-distance network. The airline aims to start one-stop trips further into Europe within six months, Chief Executive Officer Ronojoy Dutta said in an interview in New Delhi last week.
IndiGo has captured almost half the Indian market in just over a decade by offering cheap, punctual flights — and charging extra for almost anything else. Dutta’s long-haul plans are forcing a product overhaul to help passengers endure longer flights and he’s considering everything from extra snacks to a brand-new business class.
“Once you get to six, seven, eight hours, the body gets tired, people need to use the washrooms more, people need to eat more frequently, all of those things change,” Dutta said. “We have to redesign our product. Is it more pitch, is it more food, is it more hot towels, is it a business class?”
Success could upend a long-haul market between Asia and Europe that’s long been the preserve of full-service carriers from Singapore Airlines Ltd. and British Airways to Emirates Airline and Cathay Pacific Airways. While IndiGo has become Asia’s largest low-cost carrier by market value, other no-frills rivals that have tried to go long-haul have left a hit-and-miss legacy.
Discount carrier Norwegian Air Shuttle ASA, which launched services on intercontinental routes, has been weighed down by losses after a rapid expansion. AirAsia X Bhd., the Malaysian long-haul, low-cost airline, opted to focus on Asia after on-off services to London, although it still flies to a Honolulu, via a stop in Osaka. Both airlines offer premium seats with extra legroom, meals and in-flight entertainment.
Scoot, the budget unit of Singapore Airlines, offers long-haul flights to Athens and Berlin. Its “Scootbiz” class on Boeing Co. 787 Dreamliner jets provides leather seats, more legroom, additional carry-on bags, welcome drinks and one additional alcoholic beverage. Business-class flyers on Scoot are also able to charge their mobile gadgets on board, and can stream movies on their own devices.
It’s not clear what IndiGo’s business class would potentially offer or how much it might cost. The airline must meet other challenges too: Fuel is typically among an airline’s biggest expenses and IndiGo faces rising oil prices as it considers setting up a long-distance network.
IndiGo wants to operate one-stop flights to cities like London from New Delhi, while flying non-stop to countries like China, Vietnam, Myanmar and Russia. It’s in talks with Airbus SE to buy a yet-to-be-released longer version of the European planemaker’s newest narrow-body jet. The airline is preparing to place a “large” order, Dutta said.
IndiGo rose as much as 3.8% before trading up 2.8% at 1,607.75 rupees at 9:37 a.m. in Mumbai on Wednesday, the stock’s highest level in a month. The broader S&P BSE Sensex index was up 0.3%.
IndiGo already flies to 53 domestic and 18 international destinations and plans to deploy about half of its new capacity on international routes, Dutta said.
A business-class section at IndiGo, which is operated by InterGlobe Aviation Ltd., would follow low-cost Indian rival SpiceJet Ltd., which just started offering premium seats, picking up Boeing Co. 737 jets already equipped with the configuration.
“The airline business is strongly segmented by the length of flying,” Dutta said. “People’s expectations change a lot because the body demands change a lot.”
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Photo credit: CEO Ronojoy Dutta. IndiGo Wants to start flying to Europe. Ruhani Kaur / Bloomberg