IndiGo CEO Pieter Elbers Defends IndiGo’s Pricing Strategy Amid Rising Regulatory Scrutiny

In an interview with CNBC-TV18, IndiGo CEO Pieter Elbers addressed key concerns around the aviation sector in India, including skyrocketing airfares during peak seasons, regulatory oversight, and infrastructure developments.

Responding to criticism over steep airfares during festive periods and events like the recent Mahakumbh, Elbers clarified that such spikes were not part of a systemic pricing strategy, but rather occasional outcomes of demand-driven algorithms.

"If there's one ticket priced at Rs 40,000 on a route, that's occasional. Sometimes these systems push up prices," he told CNBC TV18 adding that airfares have not increased as much as inflation over the past few years.

"There must be a correlation between the cost of doing business and the price of airfares. Otherwise, you'll be out of business," Elbers cautioned, highlighting the balance that airlines must maintain to ensure sustainability.

Referring to the Mahakumbh, Elbers drew attention to IndiGo's role in facilitating travel for lakhs of passengers. "Let's look what we have collectively achieved in making sure that all these people could travel there. I think we operated close to a thousand flights. There are 230 seats per flight. So that's pretty much back and forth. So that's, five lakh passengers," he stated.

The executive also reacted to the Indian government's recent move to establish a dedicated 'Air Sewa' cell for addressing passenger complaints regarding high airfares.

Elbers welcomed the initiative stating that, "To have a body like that is a good thing. Having said that, looking at the Indian market, it's one of the most, if not the most competitive markets in the world. The average price levels are extremely competitive."

Further, Elbers discussed about a recent recommendation by a Parliamentary Committee, which suggested empowering the Directorate General of Civil Aviation (DGCA) to impose temporary price caps or penalties on airlines during peak travel periods. While acknowledging the intent behind such suggestions, he emphasized the need for a broader, global outlook.

"If we want to build global aviation giants in India, we should also look at the global dynamics we're operating in, and the kind of airlines we need for that scale," he said.

"Yes, there are peaks, but so is that in hotels. On average, prices in India remain among the most competitive globally," Elbers added.

Elbers also voiced concern over the sharp increase in airport User Development Fees (UDF), warning that such hikes could deter budget-conscious travelers and reduce overall air travel demand. His comments followed the Airports Economic Regulatory Authority's (AERA) recent decision to raise UDF at Delhi Airport, CNBC TV18 noted.

Under the new rates effective April 16, international economy class departure fees rose from Rs 129 to Rs 650, while business class passengers now pay Rs 810. Arriving international passengers must pay Rs 275 (economy) and Rs 345 (business).

"I think a lot of the investments which are taking place in airports today are great investments... some of the airports in India are now world-class airport facilities and we need that... Having said that, looking at the price sensitivity, a few hundred rupees sometimes is enough to have people flying or not flying," Elbers told CNBC TV18.

As India's aviation sector continues to grow, he emphasized the importance of a globally competitive mindset backed by thoughtful regulation and sustainable investment.