India’s largest airline IndiGo expects to fly 200 million passengers annually by 2030, an 80% increase from the 113 million passengers it flew in 2024, led by its fleet expansion from 439 aircraft to 600 by the end of the decade.
Top executives of InterGlobe Aviation, IndiGo’s parent company, told analysts in Gurugram on Wednesday that the airline would expand beyond its domestic network to lucrative international routes, taking its share of international outbound traffic to 40% from the current 28%. It will also focus on premiumization by adding more business class seats.
Long-haul routes are expected to drive IndiGo’s international expansion, analysts said. “Its focus is on bringing down the cost of aircraft ownership and improving fuel efficiency by 5% in the next five years,” Kotak analysts wrote in a 20 March note.
Valuation soars, challenges remain
On Thursday, shares of Interglobe ended 2.3% higher at ₹5,093, giving it a market capitalization of ₹1,96,807 crore ($22.8 billion). This makes IndiGo the world’s third most valuable airline, behind United Airlines Holdings Inc. ($24.5 billion) and Delta Air Lines Inc. ($30.8 billion).
However, in terms of revenue, budget carrier IndiGo is much smaller than full-scale airlines like Delta – Indigo’s $9.2 billion revenue in 2024 is a sixth of Delta’s $61.6 billion in the same year.
However, IndiGo’s higher profitability—$930 million net income compared to Delta’s $3.5 billion profit—and 62% share in the world’s fastest-growing aviation market have made investors reward the airline with a premium valuation.
Founded in 2006, IndiGo has built a commanding lead with a 61.9% market share by passenger numbers, leaving the No.2 airline Air India far behind with 16.4%.
IndiGo’s overseas focus also helps as a hedge against depreciating rupee, especially as its lease liabilities are dollar-denominated. In the October-December period, a 2% depreciation of the rupee against the dollar led to a foreign exchange loss of ₹1,456.4 crore for the airline.
Supply challenges
Ongoing premiumization and the international push are expected to test the carrier, which has built its dominance by operating as a budget carrier, and its current chief executive officer, Pieter Elbers, the former KLM chief executive who joined the airline in 2022.
However, IndiGo, like many global airlines, faces the twin challenges of engine problems and the availability of new planes. Faulty engines supplied by Pratt and Whitney, the US engine maker, have led to the grounding of many of its planes, forcing the management to take planes on leases. For now, the number of planes grounded has come down from the 60s in 2023 to 40s during the October-December period.
The other challenge is whether it could continue to receive one plane from Airbus every week in the coming decade.
“We note the recent comments coming in from Air India, IATA and Boeing related to a prolonged demand-supply mismatch globally and more so in India,” Kotak analysts wrote in their note on Thursday. “The key message: it would be difficult to expect a delivery of an aircraft globally within five years of ordering.”
“IndiGo currently has an outstanding order book of 925 airplanes, ensuring delivery of one aircraft per week up to FY30E. Wide-bodied mid-long haul XLRs are set to be inducted from FY26E to service European markets with IndiGo set to establish its network with damp-leased B787s Jul-26 onwards. Long-haul A350s are set be delivered from FY28E to undertake long-haul flights, likely to North America,” Nuvama analysts Jal Irani, Tanay Kotecha and Akshay Mane wrote in a note dated 19 March.