IndiGo urges Indian government to lift capacity caps

Adrian Schofield July 29, 2021

Indian LCC IndiGo is looking to fully restore its domestic capacity to pre-COVID-19-pandemic levels, but to achieve this goal it will need the government to ease capacity restrictions.

During the carrier’s latest earnings call, CEO Ronojoy Dutta said IndiGo hopes to return to 100% of its pre-COVID-19 domestic capacity by the end of this year, which would then allow its revenue to recover.

A key assumption is that any third wave of the pandemic “will be relatively flat” because of rising vaccination rates, Dutta said. India has just come out of a devastating second wave of COVID-19 cases that caused carriers to drastically cut back domestic flights.

Another key assumption is that the Indian government will remove or increase its limits on domestic capacity that have been in place since May 2020. The limit has been adjusted multiple times depending on India’s COVID-19 case numbers. It currently restricts airlines to 65% of their pre-pandemic capacity.

IndiGo has previously urged the government to remove the capacity limits. During the earnings call, Dutta said IndiGo is “in continuous dialogue with the ministry [of aviation] and we are hopeful that we will see a gradual relaxation of these restrictions.” He stressed that IndiGo’s “primary focus remains on adding capacity so that we can get back to pre-COVID levels as quickly as possible.”

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The airline has now increased its domestic capacity close to the 65% limit, but for the quarter ending June 30 IndiGo’s capacity was at 44% of pre-pandemic levels because of the second COVID-19 wave. Its domestic capacity reached 75% for the quarter ending March 31, when the government cap was higher.

Meanwhile, the carrier announced July 29 that Jabalpur (JLR) would become its 69th domestic destination. The airline will fly daily from JLR to Mumbai (BOM), Delhi (DEL), Hyderabad (HYD) and Indore (IDR) from Aug. 20.

"These new connections will strengthen connectivity between Jabalpur and the key cities in the country, while fulfilling the demand for enhanced connectivity," IndiGo chief strategy and revenue officer Sanjay Kumar said, adding that the flights will spur "tourism in Jabalpur, especially at this time when Indians are increasingly looking towards domestic vacations, and unexplored gems in the country."

Photo credit: Prakash Singh/AFP/Getty Images