IndiGo capitalizes on premium market as economy fares decline and business class sales increase | Company News

IndiGo to Introduce Business Class on Domestic Routes, Disrupting Market Dynamics

In a surprising move, IndiGo, known for its budget-friendly economy class fares, has announced plans to introduce business class on its “busiest and business routes” by December. This decision comes as a response to the sharp decline in average economy class fares on India’s high-frequency domestic routes, as reported by aviation analytics firm Cirium.

According to Cirium’s data, Indian carriers saw a significant drop of up to 47.5 per cent year-on-year in economy class fares on seven key routes in February. In contrast, business class fares surged by as much as 59.3 per cent during the same period. This trend has been capitalized on by Air India and Vistara, the only carriers currently offering business class, to charge premium prices.

Sanjay Kumar, former chief strategy and revenue officer at IndiGo, emphasized the need for competition in the business class segment, stating that IndiGo’s extensive flight network positions it well to disrupt the market. Industry insiders predict that IndiGo’s entry into the premium sector will intensify competition and challenge the pricing power of its rivals.

IndiGo’s strategic approach includes the upcoming introduction of A321XLR aircraft with longer range capabilities, paving the way for a potential business class offering on domestic routes. While the delivery of widebody A350-900 jets is not expected until 2027, the airline is set to receive its first batch of A321XLR aircraft as early as next year.

With IndiGo’s foray into the business class market, passengers can expect increased competition, potentially leading to more affordable premium travel options on India’s most frequented routes.