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Indigo is a low cost carrier, which already has 99 A-320s in its fleet has ordered 431 more. This airline currently covers 35 routes, while the full service carrier Emirates has 221 planes, and covers a fancy 164 routes. In its home country as well, the biggest player Air India has 102 planes and covers 95 routes. So, what are these LCCs planning to do with so many aircraft? Renting could be an idea, but you just do not go for renting as much as 4 times of your crew size.

Similarly,

  • AirAsia has ordered 304 A320s,

  • EasyJet has ordered 100 A320s,

  • RyanAir has ordered 100 B-737.

  • Norwegian has ordered 100 A320s, 100 B737,
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    $\begingroup$ In a sense, the answer is: India has a BILLION people. If you've been to say HK or Shanghai 15, 20 years ago .. visit Mumbai now. $\endgroup$ – Fattie Jun 9 '15 at 4:41
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Volume Orders Discounts

These result in significant discounts to the airline. While discounts are commonplace in the industry, Ryanair ordered 737-800 for an estimated 40-50 million dollars as compared to the list price of around 90 million dollars. With an order of that size Boeing could not risk losing it to another manufacturer, and will be satisfied with less profit per aircraft. Source

Fleet strategy:

Some airlines sell their old aircraft after only a few years while their value is still high but the maintenance costs start to increase. Increased maintenance is bad when you try to squeeze out as many flights as possible and you have small profit margins on every flight. You can find some of Ryanair's old aircraft by the company code (AS) with other operators by searching 737-8AS.

Another suggestion is that the customers perception of Low-Cost airlines is generally negatively biased and having new aircraft counters this effectively.

Old Aircraft

Some operators (such as charter operators) will not have the same sensitivity to a slightly higher fuel consumption on their aircraft. They may not use their aircraft the same number of hours, so having an increasingly expensive jet sitting on the ground is not cost-efficient. The aircraft ordered by IndiGo are all new fuel efficient A320NEO.


Some of these ideas are emphasized in your link.

Of its 530 orders from IndiGo, Airbus has so far delivered 99 aircraft. The airline currently has a fleet of 83 planes and has phased out 16 planes that were over six year old or among the first in its fleet.

A bit of Ryanair strategy is outlined in this document.

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    $\begingroup$ The aircraft ordered by Indiegogo they kickstarted an airline? :P $\endgroup$ – Federico Jun 8 '15 at 10:50
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    $\begingroup$ @Federico not in this case ;) but see this $\endgroup$ – Thunderstrike Jun 8 '15 at 10:52
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It might be that Times of India are over-reporting the actual orders. The aircraft industry has various types of orders and options.

Other sources (pdxlight) say that Indigo has firm orders for 180 A320neos.

If Indigo replaced their existing A320s this would represent a doubling of their fleet size - still surprising but less so than the five-fold increase from 99 to 530 suggested.

Indigo have also signed a memorandum of understanding for 250 aircraft. This isn't a firm order. Indigo claim " The additional aircraft will enable us to continue to bring our low fares and courteous, hassle free service to more customers and markets and will create more job opportunities and growth." - presumably if their ambitious expansion plans do not work out as expected, this MoU will not be converted into firm orders.

There have been reports of an IPO for Indigo and other sources of funding.

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    $\begingroup$ The aircraft industry has various types of orders and options. - yes, that. When the Dreamliner finally came to production, many airlines ordered some only to later sell the bid for buy at a premium (to those who wanted the plane but found themselves too far down on the list). $\endgroup$ – Pavel Jun 8 '15 at 12:33
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Outfitting an airline with a single, modern type will yield the lowest operating cost once financing of the acquisition is secured and crew compensation stays low. This, together with the rebates connected to a big order, enables the airline to win any price war with its local competition, because its aircraft will consume less fuel and will be profitable at lower seat-mile prices than those of a competitor which operates a mixed fleet of different types and older aircraft.

Now the investor needs only some patience, and after a few years of losses he will be able to reap monopoly profits. This, at least, is the strategy behind such big orders of a single type.

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