In a surprising move that reflects the intensely competitive landscape of Indian aviation, IndiGo, the country’s largest airline, is incorporating Boeing 737 MAX 8 aircraft into its fleet via wet-lease agreements with Corendon Airlines. The first two MAX 8s arrived in Delhi from Antalya on Sunday, with more expected this month. This isn’t Corendon’s first foray into the Indian market; the Turkish carrier has a history of providing aircraft to SpiceJet on a wet-lease basis. Corendon, with sister airlines in the Netherlands and Malta, is a familiar sight in Indian skies.
This strategic decision comes against the backdrop of a record-breaking November for Indian domestic aviation, a month which saw the highest passenger traffic ever recorded. IndiGo itself transported over 10 million passengers, a first in its 18-year history. However, this success is being challenged by a significant uptick in competition, most notably from Air India Express, Air India’s low-cost subsidiary. Air India Express, benefitting from its parent company’s resources, is aggressively expanding its reach into routes previously dominated by IndiGo. The transfer of routes and aircraft from Air India and Vistara to Air India Express puts pressure on IndiGo’s yield, particularly as Air India Express can offer competitive pricing unlike its higher-cost mainline counterpart.
IndiGo’s current fleet expansion is hampered by over 50 grounded aircraft due to Pratt & Whitney engine issues. This constraint on adding flights, a traditional method of responding to competition, is forcing the airline to explore alternative solutions. The wet-leased Boeing 737 MAX 8s are the latest addition to IndiGo’s existing wet-lease agreements, which already include two B777s from Turkish Airlines serving Istanbul and six MAX 8s from Qatar Airways servicing Doha. These existing agreements, along with the latest additions, highlight IndiGo’s willingness to leverage wet-leasing to meet its capacity needs.
While the wet-lease of additional aircraft from Corendon Airlines is helping IndiGo maintain its competitive edge and ensure it continues to be a market leader, this decision is not without potential challenges. This marks a departure for IndiGo, whose previous wet-lease experience in 2017 involved aircraft that were very similar to its existing fleet. In contrast, the Corendon MAX 8s have a different seating configuration (189 seats compared to IndiGo’s 180 or 186), potentially leading to operational complexities and the need for staff retraining. The added layer of complexity is particularly noteworthy because the Corendon aircraft will operate on domestic routes, unlike the existing wet-leased planes serving international destinations, leading to potential passenger confusion.
Despite these logistical hurdles, IndiGo’s commitment to wet-leasing underscores the acute shortage of aircraft in the Indian market. While carriers like SpiceJet regularly rely on wet-leasing to maintain operations, Air India and Akasa Air haven’t adopted this strategy to the same extent. IndiGo, with a strong financial position, likely views the costs as a strategic investment to maintain its market share and leverage current circumstances to bargain on compensation for grounded aircraft. Notably, the addition of these wet-leased planes also removes potential capacity from other airlines.
The long-term implications of these wet-lease agreements remain to be seen. The decision to keep the Qatar Airways MAX 8s in their original livery, unlike the Turkish Airlines B777s which operate in IndiGo’s branding, suggests a shorter-term commitment. However, only time will tell if this marks a significant shift in IndiGo’s fleet strategy or a temporary measure. The airline’s upcoming Q3-FY25 results, expected by mid-February, will provide further insights into the financial success of this bold move. Despite the complexities, the prospect of a substantial profit exceeding ₹3,000 crore remains a strong possibility.
