IndiGo to bring in business class seats on long-haul flights

India's largest domestic airline, IndiGo may soon offer business class seats on its long-haul flights. The carrier plans to adopt a two-class configuration — with a small business class along with the economy seating.

Other than business class seating, the low-cost also plans to offer unbundled products like meals, priority boarding, and check-in and seat selection to economy passengers, Business Standard (BS) reported on Thursday.

"If we expand our operations to include long-haul international routes, we may have to consider full-service flights, business class seating, code-sharing arrangements," IndiGo's parent company Interglobe Aviation, said in its Draft Red Herring Prospectus (DRHP).

A senior IndiGo executive told BS that the carrier even plans to lower fares by as much as 30 percent on the long-haul flights.

"We will offer a small business class, along with high-density economy class, with 25-30 percent lower fares. We have a cost structure that is the lowest in the world and that will allow us to bring down the fares," he said.

The carrier is likely to choose International Airline Group's (IAG) Airbus A330-200 model for its long-haul operations, the aircraft provides 314 economy class seats and 21 premium seats, sources told BS.

IndiGo has one of the lowest cost structures not only in India, but across the world. Excluding fuel cost, IndiGo's expense of operating one seat for one kilometre (CASK) is Rs 1.79, while the same for its low-cost rival SpiceJet is Rs 2.33. Among global LCC majors, American airline Southwest burns Rs 3.52, while Ryan Air in Europe spends Rs 1.45, the company said in its DRHP.

However in the DRHP, the company highlighted that operating long-distance routes can be a challenge as the airline. "The majority of our existing operations are focused within India, and we have less experience operating in international sectors. Future international expansion initiatives that we may undertake would involve risks that are not generally encountered when doing business only in India," the company said.

"Premium traffic may account for only around 10 to 20 per cent of passengers, yet it can represent up to 50 per cent of revenues in long haul," BS quoted a senior Air India official as saying.

The budget passenger carrier earlier expressed interested in acquiring national passenger carrier Air India's international operations. However, it is not keen on going in for a joint venture (JV) with the government.