Dubai: Indigo CEO Rono Dutta said the Tata Sons-backed family of airlines will give India’s largest low-cost carrier “tough competition” going forward.
“I see them as a formidable force, but I think it’s good for the industry – leaving Air India as a government entity is not a sensible thing to do,” said Dutta, during a pre-recorded interview with CAPA (Centre for Aviation).
The airline head said the move will make the flagship carrier more economically responsible. “Having a large competitor who is funded by taxpayers is not healthy competition for us – they can do things that we wouldn’t dream of doing.”
Last week, Tata – one of India’s largest conglomerates - successfully took over Air India following a $2.4 billion bid, finally bringing to end privatization efforts that began in 2018.
Air India, which has been India’s national carrier since 1953, is “sitting on a lot of bilateral rights,” said Dutta. “We (Indigo) will be struggling as we go international”
A Tata-owned Air India is not the only threat to Indigo’s top spot. Akasa – the airline startup backed by billionaire investor Rakesh Jhunjhunwala – is targeting a summer 2022 launch after receiving a no objection certification (NOC) from the government.
“Akasa is far less competitive for us for the next 2-3 years - they’ll have to grow slowly and get the slots and the planes,” said Dutta. “They’re not going to be coming out of the box raring to go”
“We have good defenses - we are the lowest cost carrier (and) It’ll be tough when you want to get the costs lower than us,” he added.
International is down
Although India’s domestic market has taken off due to easing of restrictions, international routes still remain an issue for Indian carriers.
The airline’s passenger capacity in the domestic market stood at 85 per cent, compared to 35-40 per cent internationally. “After they opened up Doha, Dubai and Sharjah things have been looking much better internationally,” said Dutta.
“My next push is to get Saudi Arabia and Thailand – those are again important markets for us,” he added.