The Memorandum of Understanding for Airbus’ leading single-aisle aircraft family was signed by its co-founders Rakesh Gangwal and Rahul Bhatia, group managing director of InterGlobe.
IndiGo president Aditya Ghosh said that the new additional aircraft would enable the airline to continue bringing its low fares and hassle-free service to more customers and markets, besides creating more jobs and growth.
“This new order reaffirms IndiGo’s commitment to the long-term development of affordable air transportation in India and overseas,” Ghosh noted.
The current order is the third time that IndiGo has signed such a massive aircraft deal with Airbus.
It signed the first agreement in 2005 to buy 100 A-320s when the total order was worth $6 billion. That order, the planes under which are currently in the process of being delivered, too was one of the highest by any domestic carrier at that time.
Again in 2011, the airline placed the single largest order in global aviation history, for 180 A-320s worth an estimated $15.6 billion from Airbus.
Out of the 180 single-aisle aircraft, 150 are supposed to belong to the eco-efficient ‘neo’ series, and the remaining 30 are the standard A-320s.
They are expected to be delivered between 2016 and 2025.
“The A-320neo continues to dominate world market share and this commitment confirms it as the aircraft of choice in the most dynamic aviation growth markets,” said Airbus president and CEO Fabrice Bregier.
The airline achieved the highest market share at 32.6 percent in August. It operates 83 A320 aircraft, including those imported till 2014. It has also inked a leasing deal to take 12 A320s from Singapore’s Tiger Airways.
The new order book is expected to keep the average age of its fleet to around six years.
India Inc. too endorsed the budget passenger carrier’s order, stating that it was a testament to the Indian aviations potential.
According to industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) the firm order for 250 Airbus A-320neo aircraft, the single largest order by a single airline, reaffirms the confidence in Indian aviation growth story.
“India is one of the least penetrated markets in terms of aircraft. The sector is just taking off and the order reaffirms the confidence in Indian aviation growth story,” A. Didar Singh, secretary general, FICCI, told IANS.
“The sector is expected to grow at a fast trajectory as the economy improves.”
Singh’s view were corroborated by Amrit Pandurangi, senior director, Deloitte in India, who said that after consolidating its position as the largest market share holder, the airline is looking at the future prospects of the industry.
“The company has a history of making strategic purchases. It has consolidated its position and is now clearly focusing on the future potential of the industry,” Pandurangi told IANS.
Rajiv Chib, associate director- aerospace and defence, told IANS that the airline’s order at this junction is the testament to the growth potential of the country’s aviation sector and the given the fact that the low cost segment has boomed in the recent past.
The A-320neo ‘new engine option’ incorporates many innovations, including latest generation engines and large sharklet wing-tip devices, which together deliver 15 percent in fuel savings from day one and 20 per cent by 2020 which is equivalent to a reduction of 5,000 tonnes of CO2 per aircraft per year.
The A-320 family is the world’s best-selling single aisle product line with almost 11,000 orders till date and over 6,200 aircraft delivered globally to 400 customers and operators.
It has a wide cabin and offers the industry’s best level of comfort in all classes and Airbus’ 18-inch wide seats in economy class as a standard.
IndiGo was allowed to import 28 Airbus A320 aircraft in 2013 and 2014.
Founded in 2006, the Gurgaon-based low-cost airline commands the largest market share of over 32 percent with over 530 daily flights.
IndiGo is expected to come out with an initial public offering (IPO) next year.
Recently, the Competition Commission of India (CCI) approved the proposed merger of US-based Caelum Investment, which owns 47.88 percent in the airline, with InterGlobe Aviation, the majority stake holder in the company.
The short-medium haul flight operator is the only profit making airline currently operating in the Indian skies. It reportedly made a profit of Rs.350 crore last financial year.
The success of the airline is primarily attributed to its industry first moves like leasing aircraft, tight control over costs, best slot timing of its flights between the major cities.
The airline’s mega order can also be explained with the fact that Indian civil aviation sector which has been growing at a compound rate of five percent in the last two years is expected to become the third largest by 2020.
According to the Commerce Ministry’s India Brand Equity Foundation (IBEF), India’s aviation market is expected to become the third largest by 2020 and largest by 2030.
By the market size, the Indian civil aviation industry is amongst the top 10 in the world with a size of around $16 billion.
In the April-May period of the current financial year, aircraft movements and passengers have increased by five percent each over traffic handled during the corresponding period of FY14.