IndiGo working on next aircraft order; might consider widebody aircraft as well

IndiGo, India’s largest airline by many counts, including a 55% domestic market share as of the time of writing this report, has started to work on its next aircraft order.

IndiGo’s aircraft orders so far

IndiGo placed its first aircraft order for 100 A320ceo aircraft in June 2005, making news as an upstart airline then with a large aircraft order being placed. Since then, many A320 family orders have been placed, including a second MoU for 180 A320neo aircraft placed in 2011, followed by another A320neo aircraft in August 2015. Subsequently, Airbus received another order for 87 A320neo and 213 A321neo/XLR aircraft in 2019, taking IndiGo’s total number of A320 family aircraft on order to 830

Why does IndiGo order so many aircraft?

IndiGo usually prefers to take brand new aircraft for which it negotiates the best terms with the manufacturer (perks of being one of Airbus’ biggest customers). At the time of delivery, they have a lessor buy the jet from them (IndiGo) at a potentially higher price and then rent the plane from the same lessor. This is the practice called Sale and LeaseBack (it all happens back-to-back) and helps IndiGo raise significant cash every time they take delivery of an aircraft with this model.

But the leasing model also helps IndiGo in another way. Back in the day, IndiGo used to collect brand-new aircraft, use them for six years, and then send them back to the lessor, who would lease them out to some other airline. Given the supply chain problems and Covid-19 and so on, this model is no longer as pure, with IndiGo holding on to older aircraft as well right now.

So, to keep this pipeline milling of replacing old aircraft and their costs low, IndiGo needs new aircraft, apart from the obvious other moves, to expand the number of flights they can offer and hence, their market share.

Bottomline

IndiGo is getting set to order its next batch of aircraft, and this time around, there could also be some wide bodies in the mix. The airline might be ready to place its orders by Paris Airshow 2023. Reporting puts the order size at about 500 aircraft, which in its current shape, could outnumber the most significant aircraft order yet, by Air India.