* IndiGo to form separate unit to manage ATR fleet
* IndiGo reports 25 pct fall in net profit in Q4
* Carrier to add 39 new A320 aircraft in FY2017-18
(Adds comments from company executives)
By Aditi Shah
MUMBAI, May 9 Indian airline IndiGo said it
plans to start flying smaller planes to second-tier towns and
cities later this year, in a shift in strategy for the carrier
that has prided itself on the simplicity of running only one
type of jet.
IndiGo, which has a fleet of 131 Airbus A320
aircraft, said on Tuesday it has placed a provisional order for
50 ATR 72-600 aircraft from European turboprop maker ATR, worth
over $1.3 billion at list price.
IndiGo joins national carrier Air India and SpiceJet
which have finalised plans under Prime Minister
Narendra Modi's scheme to make it cheaper for people to fly
within India. The scheme subsidises part of the cost for
airlines to fly to smaller towns.
"We should see increased business activity in small towns
and cities which will increase demand for air travel in these
regions," IndiGo's President Aditya Ghosh said after the company
reported a 25 percent fall in quarterly net profit.
InterGlobe Aviation Ltd, owner of IndiGo, said net
profit fell to 4.4 billion rupees ($68 million) in the quarter
ended March 31, from 5.84 billion rupees a year ago, as fuel
costs jumped 71 percent over the same period.
The company said it expects available seat kilometre, a key
measure of an airline's capacity, to increase by 22 percent in
the April-June quarter.
IndiGo, which has maintained its efficiency by operating
only one type of aircraft, said it plans to set up a separate
unit to manage the ATR fleet to reduce the complexity of flying
two different types of aircraft.
Functions such as flight operations, in-flight services,
route planning and revenue management will be managed by a
separate team, whereas administrative functions like human
resources, finance and legal would be controlled by IndiGo.
"It would avoid adding complexity to mainline operations,"
Ghosh said during an analyst call, adding that it would also
result in synergies in corporate overheads and ground handling.
The company said it expects to have up to seven ATR aircraft
by March 2018 if it reaches an agreement to buy the planes.
IndiGo also expects to add 39 new aircraft in the current
fiscal year that started on April 1, of which 28 will be
A320neos, taking the total to 170 A320 aircraft.
The carrier has faced operational issues with some A320neo
aircraft due to problems with engines built by Pratt & Whitney,
a unit of United Technologies Corp.
Ghosh said IndiGo expects Pratt & Whitney to provide a
solution to one part of the problem by the fourth quarter of
2018 and the engine maker is working on a new design solution
that will be retro-fitted later.
Pratt & Whitney has also carried out hardware and software
changes on all of IndiGo's A320neos which should address part of
the issue, he said.
IndiGo has ordered a total of 430 A320neo aircraft in the
past two years, making it one of Airbus's biggest customers.
($1 = 64.6700 Indian rupees)
(Additional reporting by Tanvi Mehta in Bengaluru; Editing by
Sunil Nair and Susan Fenton)