IndiGo turns 18: Airline launches business class, loyalty programme in move away from traditional LCC model | Business News

This move, which was ostensibly in the works for some time now, marks a strategic shift in IndiGo’s product offering. In nearly two decades of its existence, IndiGo has championed the one-size-fits-all single-class cabin configuration, like other successful budget airlines globally. But with changing dynamics and evolution of India’s aviation market, the airline is trying to reorient itself accordingly.

As part of its 18th anniversary celebrations, apart from unveiling its business class product, IndiGo also announced a loyalty programme—IndiGo BluChip—and a few other initiatives. Loyalty programmes, like business class seating, are not usually associated with traditional low-cost carriers (LCCs). The airline also announced that it will launch flights to another seven international destinations before the end of the current financial year, taking its total international stations to over 40.

The IndiGo Stretch offering

IndiGo’s business class cabin will have 12 seats from global plane seat maker Recaro in a two-by-two configuration. The business class meals will be curated by Oberoi Hotels. The business class product will be offered on Airbus A321 aircraft, and apart from the 12 business class seats, the cabin will have 208 economy class seats.

 “IndiGo Stretch’s seats come with a six-way adjustable headrest with neck support, 5-inch deep recline to relax, electronic device holder, 60-watt USB-Type C power supply, and a three-pin universal power outlet to stay charged during the journey. IndiGo Stretch customers will also enjoy a host of complimentary benefits such as no convenience fee, specially curated vegetarian meal box, wide choice of beverages, and advance seat selection at no additional charge along with priority check-in and anytime boarding,” the airline said in a statement.

 IndiGo’s evolution

“IndiGo is embarking on a new path of its incredible growth story by introducing a tailor-made business product on the nation’s busiest and business routes. With India’s soaring economy and the evolving aspirations of the Indian society, we believe it’s time for IndiGo to redefine business class in India, increasing availability of this service for the nation,” IndiGo’s Chief Executive Officer Pieter Elbers said. The airline had announced in May its intention to introduce business class seats on India’s busiest and business routes before the end of the calendar year. 

 Industry watchers see the competition from the Tata group’s full service carriers (FSCs) Air India and Vistara for business travellers and those willing to pay a premium for extra comfort as a key reason behind this move and some other decisions taken by IndiGo, including the launch of a loyalty programme. Yields from business and premium classes are usually notably higher than the more price-sensitive economy class. On the flipside, having premium class products also leads to higher costs for airlines.  

According to Elbers, despite the business class product adding some complexity and costs for the airline, IndiGo will continue to maintain its position of cost leadership in the market. Elbers said that the Indian flyers have evolved considerably over the past two decades and the airline must evolve as per the needs and expectations of the passengers.

 IndiGo’s founder and parent company InterGlobe Enterprises’s Group Managing Director Rahil Bhatia said that the Indian consumer deserves choice and IndiGo in its next phase of growth will ensure that the choice is provided.

 “Complexity brings with it some additional costs, but in our view, if the rewards of such complexity outweigh the associated costs, then introducing complexity…should be a no brainer,” Bhatia said. He added that with every new offering, the airline will “fiercely hold on” to its mantra of structural cost leadership.

Foundation for international expansion

The airline’s decision to introduce a business class cabin on select domestic routes is being seen as a precursor to it offering a business class product on its international routes as well, particularly on those that see high business travel as well as medium and long-haul international routes that the airline plans to operate over the coming years by inducting aircraft like the A321XLR—the extra long-range variant of the narrow body A321 aircraft—and the wide body A350, which can operate long-haul flights.

 While the airline’s leadership did not comment on the product specification for its A321XLR and A350 aircraft, industry watchers expect further evolution of the product with the induction of these two types of aircraft, given that they would be used to operate much longer flights than IndiGo’s current fleet, and passenger comfort and amenities become relatively more important than in short-haul operations.

 IndiGo recently announced its plans to enter the long-haul market with an order of 30 Airbus A350-900 wide body aircraft. So far, IndiGo has operated a fleet of over 380 narrow body aircraft, except for two Boeing 777 planes that are on damp lease and are exclusively used to operate flights to and from Istanbul. IndiGo has close to a thousand aircraft on order, deliveries of which will spill well over into the next decade. As a medium-term goal, the airline plans to double in size by the end of the current decade.

 After dominating the domestic skies with a market share of over 60 per cent, IndiGo has more recently been focussing on expanding its international network and operations, heating up the competition with not just Air India and Vistara, but also foreign carriers.