IndiGo looking at ‘wet leasing’ planes to meet travel demand

A ‘wet lease’ arrangement is one where the lessor maintains operational control of flights while providing aircraft and crew.

Reporting a second-quarter loss, Chief Executive Officer Pieter Elbers said IndiGo has been extending some of its existing leases and postponing the return of aircraft.

“Another element which is under discussion today, and we are still in the final stages of clarifying, is a possible wet lease operation,” Elbers said, adding that the market was recovering very rapidly.

With increasing competition and Air India being revived under the ownership of Tatas, IndiGo is also looking at expanding its international operations.

The domestic carrier said it was optimistic about returning to operational profitability in the current quarter after its loss for the July-Sept period widened due to high fuel expenses and foreign exchange losses.

The airline expects a jump of about 25% in capacity measured by available seats per kilometre in the current quarter from a year earlier. It also maintained guidance for a 13%-17% capacity increase for the current fiscal year.

“In the coming years, we will build on our strong (domestic)foundations with more international aspirations,” Elbers said.

He said supply chain disruption in aircraft manufacturing and subsequent shortage of spare engines worldwide have impacted the airline’s operations due to the grounding of aircraft.

IndiGo‘s reported a widening loss to ₹1,583.34 crore for the September quarter due to higher fuel costs and foreign exchange loss.

CEO Elbers listed out On-Time Performance (OTP), affordable fares, courteous and hassle-free service, and unparalleled network coverage as among the priorities. It will also focus on developing internal structures, people, and processes in line with the size of operations, customer base, and future ambitions.

“We will build on our strong foundation with more international aspirations,” he said.

The airline, also the world’s seventh largest in terms of daily departures, reported a loss of ₹381.8 crore, excluding the foreign exchange loss of ₹1,201.5 crore.

At present, IndiGo operates more than 1,600 daily flights and has a domestic market share of more than 57%.

In the September quarter of last year, the airline had a loss of ₹1,435.66 crore.

However, the total income of the company rose to ₹12,852.29 crore in the second quarter of the current fiscal from ₹5,798.73 crore in the same period a year ago, according to a release.

In the latest September quarter, total expenses jumped to ₹14,435.57 crore. Fuel costs in the latest September quarter surged to ₹6,257.9 crore from ₹1,989.4 crore in the year-ago period.

IndiGo CFO Gaurav M Negi said that while fuel and forex continue to pose headwinds, “we are reasonably confident that we will return to operational profitability in the third quarter”.