IndiGo makes historic order for 500 Airbus planes

IndiGo, India’s largest airline by market share, on Monday announced its decision to buy 500 Airbus A320 planes in a huge aviation deal on the first day of the Paris Air Show. Though the company did not disclose the deal value, informed sources pegged the list price to be around $55 billion.

The deal is the largest ever order placed by an airline by volume and takes Indigo’s orders with Airbus to 1,330 planes, including the ones it currently operates. In a statement, IndiGo said the deliveries of the aircraft are expected between 2030 to 2035.

“It is difficult to overstate the significance of IndiGo’s new historic order for 500 Airbus A320 Family aircraft. This order strongly reaffirms IndiGo’s belief in the growth of India, in the A320 Family and in our strategic partnership with Airbus,” said Pieter Elbers, chief executive officer of IndiGo. Currently, IndiGo operates over 300 aircraft and has in the pipeline a total of 480 aircraft from previous orders. These are expected to be delivered by the end of this decade. “With this additional firm order of 500 aircraft for 2030-2035, IndiGo’s order book has almost 1,000 aircraft. This IndiGo order book comprises a mix of A320NEO, A321NEO and A321XLR aircraft,” the statement added.

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This order will surpass Air India’s record-breaking purchase of 470 aircraft in March, but not in terms of the total value of the order, since Air India also purchased more expensive wide-body aircraft.

IndiGo has proven aviation analysts’ predictions right.

Satyendra Pandey, Managing Partner of aviation services firm AT-TV, had predicted aircraft orders in the range of 300–500 for Indian airlines at the Paris Air Show, citing growing demand for air travel and continuous efforts at expanding the aviation ecosystem.

Experts had also suggested that the large order is likely to come from IndiGo on the back of its aggressive global expansion plans. IndiGo, which operates flights to 26 international destinations, expects its international share to grow to nearly 30% in the coming years but has not specified the numbers of today’s order.

“This gives a clear message that Indigo will remain committed to the low-cost carrier (LCC) model and single-family narrowbody types. So, it means the current usage of widebodies could possibly be an aberration due to a shortage of aircraft and supply-chain issues,” argued Alok Anand, chairman and CEO of Acumen Aviation. Indigo has leased a few older Boeing 777s from Turkish Airlines to augment its international routes.

Experts also suggested many of these airplanes will go on to replace Indigo’s current fleet.

“Effective deployment of the fleet will remain at the 300 to 350 level, with the remaining aircraft on order being structured as part of the fleet replacement cycle every 7 or 10 years,” said Mark Martin, CEO of Martin Consulting.

Industry experts are divided on whether the recent GoFirst fiasco will give an edge to other engine manufacturers including GE, Safran and CFM, ready to steal deals at the air show.

“Pratt & Whitney issues will remain for the next 18-24 months. The GTF engines render significantly better performance both in terms of fuel saving and cost-cutting and are still preferred by several international airlines,” said Devesh Agarwal, chief analyst at Bangalore Aviation.

Indigo, in its statement, also mentioned that engine selection for record order will be done in due course. “It is expected that IndiGo will choose the CFM iLeap engine in view of recent challenges noted with Pratt & Whitney,” said Martin.