IndiGo Managing Director Rahul Bhatia has urged the government to reduce taxes on aviation and rationalise airport charges, saying lower airfares would unlock significant demand in India's rapidly expanding aviation market. Speaking to PTI recently, Bhatia said air travel is now a public utility but continues to be taxed as though it remains a luxury mode of transport. 
He said India's consumers are highly price-sensitive and that making flying more affordable would encourage many more people to travel by air. According to him, this requires coordinated efforts from airlines, airport operators and the government to keep aviation costs under control and support long-term growth. 
Bhatia pointed out that airlines have absorbed most of the increase in operating costs over the past three years instead of passing them on to passengers. While inflation has risen by around 12 per cent during this period, the fares retained by airlines have increased by only 1 to 3 per cent. In comparison, User Development Fee (UDF) charges at airports have increased by as much as 95 per cent, while landing and parking charges have gone up by around 34 per cent. 
He said airlines continue to make every effort to keep ticket prices competitive despite rising expenses. However, he added that there are situations where fare increases become unavoidable, particularly when fuel prices rise sharply. In such cases, he said IndiGo has a responsibility to lead fare revisions, but if market conditions improve, the airline also reduces fares accordingly. 
Aviation turbine fuel accounts for nearly 40 per cent of an airline's operating costs, making it one of the industry's biggest expenses. Besides higher fuel prices, airlines have also faced increased operating costs because of longer flying routes caused by airspace restrictions linked to the ongoing West Asia conflict. 
Bhatia said IndiGo's primary protection against fuel price volatility is operating newer and more fuel-efficient aircraft. He noted that aircraft with significantly better fuel efficiency help reduce fuel consumption and lower operating costs. He also said that, to the best of his knowledge, no Indian airline currently follows fuel price hedging as a strategy. 
Airfares in India are not regulated by the government, and airlines determine ticket prices based on market conditions. Operating costs vary depending on several factors, including international ATF prices, foreign exchange fluctuations, excise duties, state-level Value Added Tax (VAT) on jet fuel, lease rentals and airport-related charges. 
Addressing concerns over IndiGo's dominance in the domestic aviation market, Bhatia said the airline's 66.3 per cent domestic market share, recorded in June, should be viewed in the context of its network expansion strategy. He explained that around 34 per cent of IndiGo's capacity is deployed across nearly 250 unique city pairs where the airline has created new air travel markets instead of competing with other carriers. 
He said these routes are open to all airlines, but IndiGo has invested in developing demand by connecting underserved destinations. While some routes perform well and continue to grow, others are discontinued if demand does not materialise. 
According to Bhatia, when these exclusive routes are excluded, IndiGo's market share on routes where it directly competes with other airlines falls to the low-40 per cent range. He also pointed out that the airline holds only around 20 per cent of the international markets it serves, arguing that the perception of IndiGo being excessively dominant is not entirely accurate. 
India remains one of the world's fastest-growing civil aviation markets, with passenger traffic continuing to rise alongside airport infrastructure expansion and airline fleet additions. IndiGo, which is set to complete 20 years of operations in the coming month, currently operates more than 2,100 flights every day with an operational fleet of over 400 aircraft. The airline also has one of the world's largest aircraft order books, aimed at supporting its domestic expansion and international growth in the coming years. 
Source PTI