India: IndiGo forecasts a strong 2025 but with lower profitability per seat
The Indian airline seeks to increase its revenue from operating international routes to offset losses caused by the depreciation of the rupee.
IndiGo, leader in the Indian domestic market, anticipates strong travel demand in the fourth quarter of the fiscal year but expects a slight decrease in yields due to increased capacity. According to the company, available seat kilometers (ASK) will grow 20% year-over-year between January and March, driven by ongoing aircraft deliveries from Airbus.
In 2024, IndiGo received 58 Airbus aircraft, according to data from the manufacturer. However, this capacity expansion may have been a factor in the earnings reduction, noted Gaurav Negi, IndiGo's Chief Financial Officer, during a conference held after the earnings release. This contrasts with the previous year when capacity constraints caused by engine issues helped maintain high yields.
IndiGo reported a 19% decline in third-quarter profits, impacted by significant foreign exchange losses, despite carrying a record 31.1 million passengers. To mitigate the impact of the rupee's depreciation against the dollar, the airline plans to hedge most of its foreign currency positions and increase its international operations, including the launch of long-haul routes.
Currently, international operations account for about 10% of IndiGo’s revenue. The airline aims to expand this proportion with revenues denominated in foreign currencies, such as the dollar, according to Negi.
Market dominance and future outlook
According to Reuters, IndiGo dominates the Indian domestic market with a 63% market share as of December and operates a fleet of 437 aircraft. The airline, one of the few profitable carriers in India and the largest in Asia by market capitalization, reiterated its forecast that 40% of its grounded fleet will be operational by April, in addition to projecting capacity growth (ASK) near double-digit percentages for the fiscal year 2025.
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