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HomebusinessLow costs keep IndiGo flying high in India's cut-throat airline market

Low costs keep IndiGo flying high in India’s cut-throat airline market

Indian budget airline IndiGo is likely to reap the rewards of its frugal business strategy when it launches an expected $465 million initial public offering (IPO) on Tuesday, inviting investment in one of the world's fastest-growing yet fiercely competitive aviation markets.

IndiGo, India's largest airline by passenger numbers, is the only consistently profitable local carrier for the past seven years, according to consultancy Centre for Aviation (CAPA).

For investors, this success in dodging the high operating costs and taxes that have grounded debt-ridden Kingfisher Airlines and forced the bail out of budget airline SpiceJet in recent years makes IndiGo an attractive bet in a market where passenger numbers are growing at up to 18 percent a year, bankers say.

"They have figured out that people are more focused on getting to their destination on time than anything else. And they deliver that better than any airline," said Gaurav Narain at Ocean Dial Investments, a London-based India-dedicated fund.

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