I would like to share some details on a story we are pursuing and would appreciate inputs from others from the aviation domain on this topic. The story concerns the latest star on the Indian aviation scene that is Indigo Airlines (6E). Our main lead on this story is what appears to be a disgruntled member of the management who has put in his papers or on the verge of doing so: and this element must be factored into whatever he is saying now.

Essentially the gentleman makes the case that 6E is another ponzi airline being run on exactly the same lines as KF. The airline is one big exercise of converting large sums of black moolah to white. Keeping the multiple conspiracy theories out, the main summary is roughly as follows:

> There is no way 6E is making money at the current fare levels as the airline is dumping capacity in order to gain market share. According to him (and i havent verified this independently) 6E is selling over 70% of its inventory at the lowest fare bucket, while the corresponding figure for Jet is around 40-50% and for AI around 25-45%. Fare buckets are labelled A B C etc and there is a diff of around 200 rupees between 6E and AI for the same bucket. So if bucket A is 4000 rupees in 6E it is 4200 on AI and so on.

> 6E also sells inventory (seats) on convoluted routings like CCU-PNQ via MAA and DEL-GOI via BLR. This impacts the profit per seat (yield).

> 6E is paying its crew as much as 9W. and in many cases more. Infact the gentleman himself claims to make 30% more than his counterpart at Jet which he chooses to call a Marwari company (implication=miserly?).

> The third important point is something I have observed and tend to believe. 6E has a more buffered schedule than other LCC's and even Jet. As i have shared in a previous post, we noticed 6E turnarounds were much longer and spaced out than even AI! On the other hand, 6E and SG aircraft are flying well past midnight as compared to AI or 9W. But on the whole, how much truth is there in the assertion that 6E aircraft utilization is higher?

> as many as 12-16 aircraft are out of rotation in checks for which they send planes to Sri Lanka and Singapore.

> In response to a query on lower aircraft acquisition cost (since cost of asset does factor into profitability question), i was told that 6E has actually paid to buy earlier delivery slots from other airlines: and these deals were struck directly with airline not Airbus. So were the aircraft cheaper.

So to sum up: if the airline is paying the same amount as everyone else for the asset (aircraft) and crew, landing slots, fuel etc and so has similar costs, how can they be profitable when they are selling more seats at a lower price than the competition? Valid question?

Apart from profitability, the gentleman talked of a more disturbing aspect, that of safety. The airline is alleged to be cutting corners and just like with KF, incidents are being covered up with clever PR. The story being told now is eerily similar to what we heard 5 years back with Kingfisher: runway excursions, illegal cargo and so on!

I can see some similarities in the PR department atleast lending some credibility to what the gentleman says: many of the (not using the word) who used to becho KF to media people are today doing the same for 6E. The script is also pretty much the same as are the tactics.

The allegation being made here is that 6E is repeating the game once played by KF: the only difference being this time using the LCC brand instead of the full service premium airline branding. But in essence the game is the same: gain market share through "loss leading" approach burning some cash (black money). Make it all back in the IPO that follows and once your money is made let the airline die a natural death.

There was an eerie sense of deja-vu in listening to this gentleman!

While i cant confirm the veracity yet since I am just collecting the data, I will agree whole-heartedly with role of media. Clearly media is being used to build PR case and this maybe with the IPO in mind(again not sure if they are actually doing this). But we are under pressure to constantly block out stories though this happens not just with 6E but also with other private airlines. Indeed that is part of the reason that I am sharing this story publicly.

But clearly after death of KF, 6E seems to have emerged as favorite of the powers that run the country!