Skift Take
IndiGo grew up as a low-cost airline, but with Indians increasingly willing to spend on luxury items, the airline is going where the money is.
Peden Doma Bhutia
India’s largest airline, IndiGo, is introducing Business Class on its popular Delhi-Mumbai route, a strategic move by the airline to cater to the growing demand for luxury and premium travel.
The new top-class class, due to debut in mid-November, marks a major shift for the airline, which has traditionally been known for offering budget flights.
Euromonitor International also predicts that India’s luxury goods market will reach INR 822 billion ($9.8 billion) by 2027, up from INR 536 billion ($6.4 billion) in 2022. Rising disposable income and a growing middle class that aspires to luxury experiences, including luxury air travel, are the main drivers of this market expansion.
“IndiGo is embarking on a new chapter in its incredible growth story with the introduction of our customized business product on the country’s busiest routes,” Indigo CEO Peter Elbers said.
A timely release
The timing of this launch couldn’t be better: “Indian travellers’ increasing disposable income and aspirations have created a segment of travellers willing to pay premium prices for priority service, comfortable reclining seats and gourmet meals,” said Alok Bajpai, chairman and group CEO, ixigo. Bajpai noted that this trend is also being seen in tier 2 and tier 3 cities, where consumers are increasingly opting for higher value products and services.
IndiGo’s decision is also in line with broader trends in India’s travel and tourism sector. A World Travel and Tourism Council (WTTC) report predicts that India will be the world’s fastest growing major travel and tourism economy, registering annual growth of 7.5% between 2021 and 2031. Luxury travel will be a major contributor to this growth, according to the report.
Indibar Rastogi, president and group head, global business travel, Thomas Cook (India) and SOTC Travel, said there was a lack of premium forward cabin service such as business class on domestic airline routes in India.
The rise of premium corporate travel
“Most companies have formulated policies primarily around economy class, with a focus on premium economy class/business class for senior executives. We are hopeful that this will come to fruition once prices for premium cabins stabilise,” Rastogi said.
“IndiGo’s introduction of Business Class couldn’t have come at a better time to capitalize on the shift in emphasis towards comfort and convenience,” Rastogi said, adding that IndiGo’s blue-chip frequent flyer programme is likely to further stimulate demand and drive loyalty among business travellers.
The growing demand for premium travel is also evident in the corporate sector. Sunny Sodhi, Managing Director, FCM Travel India further stated, “Corporate travel continues to be a key aspect for businesses to survive, thrive and grow both domestically and internationally. There is no doubt that companies are looking at travel as a non-discretionary expense.” India is set to become the seventh-largest business travel market in the world and IndiGo is catering to this growing demand by introducing Business Class.
Not a passing fad, but a fundamental change
Commenting on the significant shift in Indian consumer preferences towards luxury, Manju Sharma, Managing Director, Jaypee Hotels and Resorts, said: “We believe that the preference for luxury is not just a passing fad but a fundamental change in the Indian market.”
Rising disposable income in India is also driving a shift towards immersive and luxury travel, said Rikant Piti, co-founder of EaseMyTrip. “As the premium segment expands, more companies are offering unique, luxury experiences at affordable prices, driven by innovative business models and increased competition,” he said.
Piti also expects affordable luxury travel services to grow in India, offering a wider range of luxury experiences to travellers looking for luxury without paying a premium.