IndiGo is exploring a multibillion-dollar Embraer jet order to fill regional route gaps. The move would add a third fleet type, raising costs while supporting India's Make in India push.
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IndiGo is exploring a multibillion-dollar order for Embraer jets, according to a Mint report. The Delhi-based low-cost carrier has not commented on the potential purchase. Neither has the Brazilian planemaker.
The logic behind the move rests on a gap in IndiGo's fleet. The airline already operates Airbus A320 family narrow-bodies and has ordered wide-body A350s for long-haul flights. The A350s, due next year, will open non-stop routes to the US, Canada, Australia and New Zealand. For short-haul domestic routes and flights to Gulf and Southeast Asian cities, IndiGo relies on A320s and ATR turboprops. The ATRs, however, have been in service for a while and are aging.
The gap is in regional routes under India's UDAN scheme, which connects smaller cities, and in short international hops such as Chennai-Colombo or Kolkata-Dhaka. Embraer's E-Jets are smaller than A320s and could fit those routes. If IndiGo develops enough traffic on those routes, it could later upgrade to A320s. Smaller carriers such as Fly 91 lack that flexibility. They cannot scale up once a market grows. IndiGo, along with Air India, Akasa and SpiceJet, could step in with bigger planes, as long as runways allow.
The Embraer deal also touches the Make in India push. Embraer signed a memorandum of understanding with Adani Defence and Aerospace in January to set up India's first final assembly line for commercial regional jets. CEO Francisco Gomes Neto told Indian media that a minimum order of 200 aircraft from Indian carriers would justify the plant. IndiGo, which placed a 100-plane order with Airbus before it even started flying in 2006, would likely place a large order.
Adding a third aircraft type brings costs. IndiGo's fleet today is all Airbus and ATR. ATR is a joint venture between Airbus and Leonardo. Adding Embraer jets means new spares, new engineer training and new pilot pools. That raises operating expenses for a listed company that has built its business on a single-family fleet.
Rakesh Gangwal, the co-founder who left IndiGo, was widely seen as the airline's aircraft purchase strategist. Airbus executives told Mint that they accepted the startup's first big order because of Gangwal's backing. “You do not say ‘no’ to a person who has ordered a few thousand aircraft from Boeing and Airbus in his various innings in many US airlines,” one executive said. Without Gangwal, IndiGo's buying power may be less certain.
For now, the Embraer report remains unconfirmed. If IndiGo proceeds, the order would reshape its route network and test its cost discipline. The airline has thrived on operational simplicity. A third fleet type would complicate that formula.
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