Airline says aviation ministry has granted permission to all Indian carriers to wet lease aircraft for a period of six months, extendable by another six months.
Aviation is going through a storng uptick at the moment, with travel coming back strongly, and IndiGo has had to resort to breaking its time-tested rule of thumb of returning aircraft to lessors after six years of operations because they can’t get their new jets fast enough, and there are so many groundings of their aircraft.
IndiGo, the largest customer of Airbus narrowbody aircraft globally, seems to be charting a new path for itself with wide-body aircraft coming to its rescue. Over the past few weeks, over two dozen aircraft from IndiGo have been spotted across airports across the country for the lack of engine spares which are needed to operate them. Blame this on the supply chain squeeze that started with the pandemic and has extended with the current geopolitical situation, apart from the clear inability to scale up production by the aviation ecosystem as demand rises.
In the meantime, IndiGo has charted out an aggressive code-share strategy, which is mostly in its league, with American Airlines, Virgin Atlantic, Qatar Airways and Turkish Airlines, amongst others. While in most cases, IndiGo is responsible only for the Indian leg of bringing the passenger from/to Indian airports to gateway airports, with Turkish Airlines codesharing, their codeshare extends to the India – Turkey flights as well. India and Turkey flights are widely constrained because the bilateral between India and Turkey has only some 3000 seats per week each way and is not being negotiated by India. Hence, Turkish only operates from BOM and DEL in India and has not been able to expand further, unlike other carriers such as Qatar Airways, Emirates and Etihad.
IndiGo to wet-lease Boeing 777 aircraft for the short term
In a news break first made by Arindam Majmudar of the Economic Times, IndiGo has finalised a deal to wet-lease up to three Boeing 777 aircraft to deploy on international routes. A wet lease means that the airline supplying the aircraft, in this case, Turkish Airlines, will also operate the plane with its own crew and be responsible for its maintenance. IndiGo will handle ground operations in India and sell tickets on its stock and mark the flight on its code. They might even put a sticker or a decal on the aircraft to signify that these aircraft are being operated by Turkish Airlines for IndiGo. IndiGo intends to use these aircraft largely to operate flights between Delhi (and Mumbai) to Istanbul and back, but will also be open to taking on charters with these aircraft.
As per ET again, there is an in-principle approval from the government of India for this lease to move forward. There are many interesting ways to look at this.
- IndiGo usually have kept its operations simplified by operating only Airbus single-aisle aircraft (and later ATR turboprop) aircraft. With this short-term lease, it can test many hypotheses for itself, including its eventual capability to fill up a wide-body aircraft and offer bussines-class services on its aircraft. Ultimately, IndiGo already edges towards 222-232 seats on their A321 aircraft, and the Boeing 787-8 has 250ish seats in a two-class configuration or closer to 280-290 in a one-class configuration. But Business Class is a different animal, and IndiGo is totally outsourcing the part of offering services while keeping the ticketing for itself.
- Turkish Airlines has been stalled for growth in India (for reasons I explained above) while its other contemporaries have gotten ahead over the years. This is a sort of backdoor way for them to access the Indian side of the bilaterals and still make money on it.
In the meantime, IndiGo, which has been operating two departures from Delhi to Istanbul, has also announced that they will start a Mumbai – Istanbul service on January 1, 2023. This means they will give up one frequency on the Delhi-Istanbul connectivity (operations for IndiGo are limited to 14 flights a week).
While these plans were not dreamt up overnight, it is going to come under the new CEO Pieter Elbers, who is in his initial days of taking charge at the airline. Rono Dutta kept stating in investor calls that they were assessing wide bodies and they were here the minute he left.
IndiGo is doing a risk-free assessment of offering wide-body services and business class, all in one go with a relatively inexpensive experiment, that of wet leasing aircraft from Turkish Airlines and using them on its longest route, to Istanbul. If this works, this might dictate future pricing and product strategy for the A321XLRs that are expected to come in 2024. Not just that, in the meantime, Turkish Airlines will be able to use more of its metal to operate to India, in spite of constrained Bilaterals between Turkey and India.