Delays in getting airplane deliveries from Airbus (AIR.PA) due to supply chain disruptions are limiting IndiGo’s ability to grow as quickly as it would like in some markets, the airline’s Chief Executive Officer Pieter Elbers said, according to a report by Reuters .
India’s aviation market is booming as demand for air travel accelerates from pandemic lows. With global demand for planes rising, Boeing (BA.N) and Airbus are scrambling to meet the overflowing order book amid supply chain issues.
“There’s an opportunity in the markets where we would like to serve our customers and we cannot do it yet to the extent we would like to,” Elbers told Reuters in an interview, asked about pressure from the shortage of aircraft supply.
“Customers are back knocking on our doors to fly. There’s a market out there. The whole pressure on the supply chain is of course something we’re not happy with,” Elbers said.
India, expected to become the world’s third-largest economy by 2030, is the fastest-growing civil aviation market and Boeing forecasts that over the next 20 years its carriers will need 2,210 new planes.
IndiGo, India’s biggest airline with more than 50 per cent share of the market, has seen a resurgence in domestic and international demand with its capacity doubling over the past year.
In the short-term, IndiGo is meeting some of this demand by extending leases on existing planes and working with partners like Turkish Airlines (THYAO.IS), which has rented IndiGo a large jet complete with crew to fill international capacity.
IndiGo also has an order book of 500 aircraft, including A321 XLRs, Airbus’ newest and largest narrowbody airliner, which would give the airline “a steady flow” of deliveries until the end of the decade, Elbers said.
A321XLR ‘WORK IN PROGRESS’
IndiGo is in talks to place a new order for more than 500 jets, including widebody planes – marking a shift from its single-aisle strategy, sources told Reuters earlier this month. Elbers declined to comment on any plane orders but said it has not ruled out adding widebodies to its fleet.
Airbus last week reaffirmed plans to deliver the A321XLR to an unidentified first operator in second-quarter 2024.
The first A321XLR for IndiGo should arrive in “the 2025-ish timeframe,” Elbers said, while adding the overall shape of deliveries has yet to be fixed.
“That’s all work in progress, so we haven’t finalized that one yet,” he said.
Analysts say the A321XLR has a key place in the growth plans of airlines like IndiGo, which hopes to extend into western Europe while benefiting from the narrow-body jet’s lower costs. But the plane’s development has been delayed by safety conditions imposed by regulators for a novel type of fuel tank.
Those changes have in turn added some 500 kilos of extra structural weight – enough to shave a couple of hundred miles from its range, two people familiar with the project said.