IndiGo May Lease Airplanes on Short Term from Tiger Airways

The Flying Engineer learnt that IndiGo may soon fly Tigerair Airbus A320 aircraft on a short term lease.

Four developments made the idea stand out. IndiGo's original order for 100 aircraft was due to finish in December 2014. New competition from TATA-SIA and AirAsia India had pushed IndiGo to raise its expansion plans. IndiGo had extended the leases on its aircraft to 10 years, up from the six years it had earlier judged to make financial sense. And Tigerair Mandala had stopped flying on 1 July 2014.

The order book

IndiGo ordered 100 Airbus A320s in June 2005. Once that order completed in December 2014, the 180 aircraft order placed in June 2011 would take over. That order was made up of 150 A320neo (new engine option) and 30 A320ceo (classic engine option) aircraft.

IndiGo took 19 A320s in 2012 and 17 in 2013. At that pace, the 30 ceo aircraft from the new order could all be in the fleet by the third quarter of 2016, just as the A320neo deliveries would begin. Early neo production rates were expected to be low because the neo shared the line with the existing A320. The neo was expected to enter service in early 2016.

Competition changed the plan

That was the plan, but the competition seemed to have upset it. To hold market share and stay ahead, the airline was possibly looking to scale up, given the new routes being added and its effort to keep aircraft in the fleet longer through lease extensions.

IndiGo had been adding at least one aircraft a month, and as many as four in some months. Yet for unclear reasons it added none in May and June 2014. VT-IAP, the next A320 due for delivery, was likely to arrive in August. That would take the fleet to 79 aircraft and mark the 95th from the 100 aircraft order, leaving five to be delivered across August to December.

Delhi based TATA-SIA expected to start operations in September. Bangalore based AirAsia India expected its second and third aircraft in late July or early August and was considering flights to the north. IndiGo may have been looking to grow in order to stay ahead through economies of scale.

Nine A320s in storage

On 1 July 2014, Indonesia's Tigerair Mandala ceased operations. It was the second time an airline called Mandala had shut down, and this time it came after Citilink and AirAsia declined to buy it. Nine of its Airbus A320s went into storage at Kuala Lumpur. The Flying Engineer believed some of them could end up at IndiGo on short term lease.

Taking these aircraft would not be an engineering headache. They were powered by the IAE V2527-A5, the same engine on IndiGo's A320s. Their cabins had a dense all economy layout of 180 seats, like IndiGo's. None of them had the fuel saving sharklets.

A note on stickiness

This might have looked like a knee jerk response to opportunity, market dynamics and competition. But such moves were adding a degree of stickiness to IndiGo's otherwise well planned operation. Some of its older aircraft, especially those over six years old, were starting to look dirty on the outside, with fuselages no longer fully white. In the past IndiGo had taken care to keep its aircraft clean.

If the Tigerair lease went ahead, it would be the first time in IndiGo's history that it operated aircraft previously flown by another airline, and the first time it flew used airplanes.

Thanks to Oscar Victor.