SINGAPORE – India’s low-cost airline IndiGo may struggle with its international operations, but the division could fully recover by the end of the year, the airline’s chief executive told CNBC this week.
Ronojoy Dutta of IndiGo, operated by InterGlobe Aviation, said the division between domestic and international segments for the airline was a “story of two cities”.
The domestic recovery has been strong, while the overseas recovery has brought “all the challenges of Covid and testing and quarantine,” he told CNBC’s Street Signs Asia on Monday.
The country last week extended a ban on international commercial passenger flights to the end of February. Local trips were allowed to resume in May.
IndiGo is a low cost airline that mainly operates domestic flights and is India’s largest passenger airline.
Aircraft operated by Go Airlines Ltd. and IndiGo, a unit operated by InterGlobe Aviation, will be on display at Terminal 3 of Indira Gandhi International Airport in New Delhi, India on Sunday, June 28, 2020.
T. Narayan | Bloomberg | Getty Images
“We’re only struggling with 28% of our capacity from Covid,” he said of international flights. However, domestic activities have reached 80% of the prepandemic level.
“I think we should reach 100% inland capacity by April at the latest,” Dutta predicted. “Internationally will open more slowly, but by the end of the calendar year 2021 we should also be at the level before Covid internationally.”
This forecast is more optimistic than other airline executives. AirAsia CEO Tony Fernandes told CNBC that passenger capacity is unlikely to hit pre-coronavirus levels by 2023.
Emirates President Tim Clark said in November the airline is aiming for a return to profitability in 2022.
IndiGos Dutta also sees the airline’s prospects as positive after the end of the coronavirus situation.
“Once the pandemic crisis is behind us, we see many growth opportunities,” he said.
He said India has very little air traffic penetration and there will be “a large amount of pent-up demand” when the economy recovers.
“Is international [an] even brighter picture, “he said, adding that profit margins are higher for international flights.
Dutta said he sees “plenty of room for growth” in traveling to and from countries within a six- to seven-hour flight from India such as Russia, Egypt, Malaysia and China.
“We are very excited about these growth prospects and, as you know, there is a major fleet expansion coming up,” he said. “I just itches to come and see until 2022 [to] continues to grow rapidly. “
– CNBC’s Saheli Roy Choudhury, Dan Murphy and Emma Graham contributed to this report.