IndiGo Stretch Towards Business Class Will Be A Game Changer For The Airline

As in several other countries worldwide, India's aviation sector has two distinct offerings: the full-service airline with a business class and the low-cost airline. Airlines like SpiceJet with their SpiceMax have had premium economy options with wider legroom and priority check-in. This status quo was recently disrupted when IndiGo Airlines announced its business class.

IndiGoStretch targets the business flier in India’s metro-to-metro routes, aiming to service all 12 routes by the end of 2025. While this segment will launch in November, bookings opened in August at a base price of Rs 18,018.

IndiGo Airlines already has the lion’s share of India’s aviation sector at 61.6% as of May 2024. Introducing business class is a significant move for IndiGo, which already has a reputation for its on-time services, as it looks to tap into a newer customer segment.

“I think they will be successful. They have a reputation for on-time performance and everyone wants that. Besides, the metro sectors, where the service will be launched, have a lot of traffic,” Subhash Goyal, chairman of STIC Travel Group at the Indian Chamber of Commerce, Aviation and Tourism Committee and president of the Chamber for Service Industry, told The Core.

IndiGo’s availability on routes across the country has consolidated its position in the market, even creating a monopoly in some sectors.

Filling A Gap

A response from IndiGo said that the business-class seating and service would include coupe-style two-seat wide bays and catering from Oberoi Catering Services. The space for each seat, including leg room, will be 38 inches and a width of 21.3 inches.

“In metro cities, there will be a lot of takers. Those who travel for work often have business class allowances but are forced to fly economy due to timing concerns. This was a gap being filled by Vistara,” said Lokesh Sharma, an aerospace and defence strateigist. He flies IndiGo for business meetings, not for the services they offer, but for the availability of maximum time slots. Sharma believes that is why other business travellers choose to fly IndiGo too.

On domestic routes, Indians had very few options to choose from in business class. While Tata-owned Vistara and Air India offered business-class services, they are set to merge on November 12. This would essentially mean that aside from Air India only IndiGo will offer these services.

The proof of the pudding, experts said, does lie in the tasting at the end of the day. “They may be sceptical initially about choosing business class on Indigo over business class on Vistara, but over time the hesitation will go away,” said Sharma, adding, “Fare isn’t going to be the deciding factor, service will be. Fare isn’t a deterrent for business class travel.”

Low-Cost Beginnings

Experts confirm that while low-cost airlines have offered premium services in the past, this is the first case of a full-service business-class offering. Around the world, other low-cost airlines have breached this barrier, especially on long-haul flights. AirAsia’s lie-flat beds and Norwegian’s value-for-money business class are some such examples.

But Goyal believes the two are fundamentally different models. “When you operate a low-cost airline, you want to have the maximum number of seats. For example, if an average flight has 100 seats, a low-cost airline will have 125. If the seat pitch is higher and you have business class, the number of seats goes down,” he said. “Similarly, the cost of tickets will be 25 percent lower than the average airline. They make money on ancillary goods like food and beverage. They have a quick turnaround,” he adds.

He also believes that this constitutes two separate offerings, and must thus be categorised as such. “I think they should create a separate brand for these offerings. Air India has also made a mistake by letting go of Vistara as a brand. People were willing to pay a higher price for Vistara. They wouldn’t pay the same for Air India.

Indigo’s image is that of a low-cost carrier. People who regularly travel business class, may still not prefer to go with Indigo. We are in the service industry, and brand value is important. People are willing to pay more for snob value,” he said.

Vistara's last flight takes off on November 11, and it is mid-November that IndiGo’s business class becomes a reality. While experts confirm, there is no correlation, the timing may be telling.

Bad Press

Earlier this year, newspapers were inundated with reports of delayed, overbooked and cancelled IndiGo flights. Several fliers described ‘harrowing’ details of their experiences aboard the carrier.

How does this impact perception ahead of the launch of new offerings?

Sharma believes that the market conditions don’t allow for such discretion. “Timing and business class are two separate issues. A business-class airline isn’t more punctual than a low-cost one. Even after all the bad-mouthing, I end up having to fly Indigo. You don’t have many other options when it comes to timing,” he says. “The market is concentrated with Air India and Indigo. If we were in a poly-market with many different players, then the bad press would make a difference,” he adds.

Paving The International Route?

While IndiGo Airlines has made no announcements about its business class offerings on international routes, experts believe that it may be the final frontier for the airline to breach.

“For international travel, which is long-haul, if they have to compete with Emirates, Qatar, and other airlines in those sectors, they will have to offer a business class. No one operates a low-cost airline for the long haul. On shorter flights, people can deal with cramped spaces and less baggage. They make money from excess baggage, too. For long-haul full-service flights they cannot do that,” said Goyal, being hopeful and cautionary.

Sharma said that success in the international sector for a business-class offering is a no-brainer. “The potential for international sectors always exists with business class. Even though Indigo does not do long-haul beyond flights that are three to four hours long at most, there will be takers,” he said.