Indigo, the largest operator in India with the size of the fleet and domestic market share, joined global colleagues in financial recovery in the third quarter of FY22.

The airline reported Rs 129.8 Crore’s profit at Rs 9,294.7 Crore income from operations. This helped cut the loss of nine months to Rs 4,480 Crore. This is the first advantage of the airline after seven-quarters of direct losses and marking a reversal far from 1,435.6 crore Rs losses in the second quarter of FY22. In the gloomy days, the profitable quarter offers hope and is a sign that will come when the world returns to normal.

Along with the results of the announcement of the Rahul Bhatia co-promoter appointed as the company’s implementing director, an empty position until now.

The result is assisted by a combination of factors such as higher use, opening tourism in India and its surroundings, passengers traveling for celebrations and holidays, and favorable changes in government policy.

Remove boundaries

The government, which has closed the capacity since the flight restart, decided to attract restrictions, allowing airlines to operate all approved winter schedules. Changes come into force on October 18, 2021, which means the airline is free to add flight on request. As a result, some airports saw more traffic than pre-covid.

In addition, countries reduce or remove restrictions because vaccination takes speed. Travel costs are reduced because double vaccinated passengers are released from producing negative test results on arrival.

The duration of the rates is reduced to 15 days in a rolling day. Allowing airlines to prices on the 16th day with a rolling base means that they can re-stimulate demand at a price. However, demand was so strong in November and December that airlines utilizing the windows – rates in most routes and flights outside the window covered the cost of 15 days.

Increased utilization, higher income and fuel-efficient fleet

For intensive business capital to succeed, the focus is always utilization. The more assets are used, the better the cost distribution. Over the years, airlines focused on encouraging utilization outside the 12-hour mark. It helps distribute costs and reduce the cost per kilometer of available seats (TONG) and AIDS profitability.

The airline increased its utilization to 10.7 hours in the third quarter because the government allowed the entire capacity to be deployed. It is still lower than pre-covid time because international services are limited under air bubble settings.

The airline mobilized 45.2 percent of additional capacity in the third quarter, which helped spread the fixed costs and led to the airlines returning to profit. Airline officials said the analyst call that Indigo wanted to achieve the use of 13 hours immediately and would submit to international operations who were given a shake. The airline has begun operating from flights under air bubbles to the United Arab Emirates, Qatar, Saudi Arabia and Kuwait.

The airline said domestic income has crossed the pre-pandemic level and international services also perform better. Both income streams will be a challenge to maintain because the world is open. On the international side, there will be more competition, which will put pressure on results, and when the stick withered tariffs, some airlines enter the price war, which will be forced by Indigo will join.

The airline returned 16 A320CEO aircraft in the quarter, three more than in the previous quarter, and the A320CEO fleet is now almost half of what it was in December 2020. The cost of fuel was 34.97 percent of total expenditure and significantly higher than in the quarter previously. . But turning to the family of “Neo” aircraft which is fuel-efficient help save up to 15 percent of fuel costs.

Note tail

Indigo always says it does not focus on market share and that it is a function of the capacity used and passengers who prefer airlines. However, the actual question is whether airlines can use defective execution strategies and brand images that are very well known to strengthen premium.

There are headwinds in the current quarter, with drastically falling traffic as restrictions at the state-returned level and the city returned and passengers away. When Covid waves subside, the combination of oil price increases and falling air traffic will hurt the airline in the fourth quarter. If there are no new variants or waves in the first quarter of FY23, it will be a quarter that must be considered and the airline may not only repeat this performance but surpass it.