Tuesday, March 5, 2024
HomeAirline NewsIndiGo Grounds 30 Planes Mid Engine, Parts Shortage

IndiGo Grounds 30 Planes Mid Engine, Parts Shortage

Shortages of engines and spare parts have forced India’s largest airline, IndiGo, to ground more than 30 planes, or about 11% of its fleet, the company said.
“As we are working on various cost-effective measures with our OEM (Original Equipment Manufacturer) partners, we are trying to minimize the economic impact of the 30 aircraft on the ground due to this global disruption,” IndiGo said.

The airline is working with aircraft and engine manufacturers to mitigate the impact of significant supply chain disruptions facing the global aviation sector to ensure network and operational continuity, it said.
The aviation industry is facing serious challenges following the grounding of 75 aircraft or 10-12% of the fleet due to maintenance and engine issues, aviation consultancy CAPA India said recently. IndiGo, which has 57.7% market share and 279 aircraft in its fleet, faces significant disruption even if one aircraft is grounded, given that it operates more than 1,600 flights daily connecting 74 domestic and 26 international destinations. The airline reported a third straight quarterly loss of ₹1,583.3 crore in September. IndiGo is concerned about supply chain disruptions, high fuel prices and currency fluctuations, it said on Friday.
“One of the key consequences of the pandemic in the aviation industry is the disruption of the supply chain in aircraft production and the consequent shortage of spare engines. This has impacted our operations due to aircraft grounding and impacted our ability to deploy capacity fully productively,” IndiGo CEO Pieter Elbers said during a post-earnings conference call. To meet the short- to medium-term capacity needs, IndiGo, which primarily operates narrow-body aircraft carrying 180-200 passengers, has decided to experiment with wide-body aircraft and will induct three B777s on chartered flights on the India-Turkey route.

“One of the reasons may be IndiGo, which inherently believes that the wide-angle, low-cost model is difficult to navigate, wants to take this indirect approach and see if it can accommodate high-volume traffic and be profitable. Another reason is that wide-body aircraft can accommodate 300 to 350 passengers and can help with immediate capacity needs,” said an analyst on condition of anonymity.
The airline is also exploring ways to slow re-deliveries through lease extensions and re-incorporation of aircraft into the fleet, in addition to evaluating crewed lease options under regulatory guidelines.

“We are optimistic about market opportunities and will continue to add flights in existing and new markets,” he added.

IndiGo is not alone in looking at a lease-based approach to acquire capacity rather than waiting for new aircraft. Air India, Vistara and SpiceJet have also decided to lease aircraft to meet short- to medium-term capacity needs. Air India proposed a 15-month plan to receive 30 aircraft on lease.
With airlines facing capacity pressure due to supply chain issues, analysts and industry experts believe that this will be a headwind for them and add to the challenges in view of fuel price volatility and rupee depreciation.
The pace of deliveries for aircraft, leased aircraft, engines and spare parts was hit hard first by the global covid lockdowns that affected production lines and then by the slowdown due to the Ukraine war. It will take at least 1-2 years to recover, an aviation analyst said.

Any impact on capacity in the peak quarter of the third quarter, with high demand, will be another challenge for the industry, he said.
Supply chain issues could also be reflected in liquidity problems for some carriers as income from sales and leaseback financing may be lower than planned, CAPA India said. Delays in the delivery of new, fuel-efficient aircraft will also lead to higher maintenance costs for older aircraft in the fleet, she argued.
The delay in the delivery of the new fuel-efficient aircraft, which claim 16% more fuel economy, will result in higher overhaul and maintenance costs for IndiGo’s older aircraft. Fuel costs for Indigo rose to ₹ 6,257.9 crore in September from ₹ 1,989.4 crore in the previous year. It also suffered a forex loss of ₹1,201.5 crore.

Leasing aircraft to cover capacity shortages also comes with its own set of challenges, as it requires business negotiations and technical checks. In addition, the layout of the interiors differs from what one runs. There are also practical problems with rotating the aircraft. Domestic airlines will be better off if they maintain capacity at pre-Covid levels at least for this winter schedule, Kapil Kaul, managing director and director, CAPA India. The next 6-9 months are likely to be turbulent due to high fuel costs, high interest rates, high inflation and ongoing geopolitical tensions.

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