Surprise! IndiGo is wet-leasing widebodies; why is the airline doing this and will it pay off?

IndiGo is adding more widebody planes to its fleet much before the airline inducts its own A350s, which are scheduled for delivery in 2027 assuming Airbus can maintain the timelines. The airline has tied up with Scandinavian low-cost carrier Norse Atlantic for wet- leasing of Dreamliners. The rumour bells have been ringing since the time Norse announced this in late November. Today marks the confirmation by both IndiGo and Norse.

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Norse had filed this with regulatory authorities in November 2024, and had called it subject to final agreements, mutual corporate approvals and regulatory approvals. The initial contract terms are subject to revision, provided regulatory approvals are in place and the estimated contract value is USD 462 million. The first two aircraft are expected to join in February 2025, while four additional planes to join in September, Norse had said in its November release. Norse will be entitled to payment for 350 block hours per aircraft each month, with additional payments possible if utilisation exceeds 350 hours per month. IndiGo now says that it will damp- lease one 787-9 Dreamliner to start operations in March while it explores opportunities for more.

With a utilisation of 350 hours per aircraft per month, it turns out to be an average of less than 12 hours a day which is not the utilisation one sees with wide-body aircraft. However, this is the minimal commitment and not the upper cap.

Why is IndiGo doing this?

IndiGo announced an order of 30 A350 aircraft in 2024, with deliveries slated from 2027. However, Air India is likely to be much stronger in 2027 than what it is today. In its constant quest to beat competition, IndiGo possibly wants to take a lead and get into the market before Air India expands further.

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Air India took a few months to send its A350s international since it had to focus on crew training, certifications and more. With wet-leased operations, this won’t be applicable for IndiGo. For years, there was a rule on adding wet-leased aircraft in the fleet only as a stop-gap arrangement and not to launch new routes. This requirement seems to have been relaxed now.

International flights are governed by a Bilateral Air Services Agreement and it takes a long time for these agreements to be revised. A lost frequency or seat can mean no longer having the ability to start flights for the foreseeable future.

What to expect in the planes?

Norse Atlantic is a Norwegian low-cost airline, which was born during the pandemic amidst the fall of another low-cost carrier, ‘Norwegian Air Shuttle’. The 787-9 aircraft are in dense configuration with 56 Premium Economy seats, which are 7 abreast with 2-3-2 seating in the front section and standard 3-3-3, 9 abreast seating in Economy with 282 seats, a total of 338 seats. For context, these are 39 more seats than the former Vistara 787-9 aircraft, which are configured in three classes.

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These seats have a 43-inch pitch but are not fully flat. The seat width is 19 inches and recline is 12 inches. The touchscreens are 11 inches and the seat comes with universal AC and USB-A pockets. The hard product is better than the pre-refurbished Air India Dreamliners. The Economy class seats have a pitch of 31 inches and are 17.1 inches wide with a recline of only 3 inches. The PTVs come with 9 inches and have a USB-A socket.

Tail Note

IndiGo currently has two wet-leased 777s that operate to Istanbul, and a bunch of MAX 8 (from Qatar Airways) which operate to Doha. The airline also has six more MAX 8 operating domestic flights, apart from wet-leased Airbus aircraft. The B777s have a dense configuration, while these Dreamliners are not as dense and offer better amenities. Norse Atlantic Airways has been going through a bad patch and has found solace in leasing out planes and operating them for other carriers.

Will this pay off for IndiGo? Wet-lease is expensive, but it is going to give IndiGo some foothold in the market and help build the market earlier than planned. The induction also coincides with the delayed refurbishment of Air India aircraft, which would mean that the airline will be hard-pressed to add destinations. Will IndiGo preempt Air India on routes, go head-on or will it open a new front like flights from Mumbai or Navi Mumbai, where Air India has been ignorant on adding flights?