Daybreak - Why Indigo went budget and premium at once

Episode Date: September 18, 2026

For two decades, an Indian air ticket told you what kind of airline you were flying. Low-cost meant cheap and bare. Full-service meant meals and baggage folded into the fare. That line is now almost gone. Indigo's new Lite fare strips economy down to a cabin bag, even as its Stretch cabin and BluChips programme reach for the premium flyer Air India once owned. Passengers are uneasy but investors, holding the only serious listed bet in Indian aviation, are not. What do Indigo's owners understand that its flyers do notDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Earlier in July, Indigo launched a new economy fair called Light. The idea was simple. It is a cheaper ticket that basically allows only one cabin bag of up to 7 kilograms. And the fair does not include a checked-in bag. So if you want to check in, you pay for it separately. Now, to some flyers, this read as a sign of where Indigo was heading. Within days, people on eggs and Reddit were calling it the Ryanairification of Indigo. Ryanair is the European carrier that is known for charging separately for almost everything.

They were the ones who, once upon a time, introduced the idea of a standing ticket also. So, the unease of Indigo Flyers was mainly about the direction. You see, the airline's fares have always been low and they've always been transparent. So, a cheaper fare now that strips out the Chectin bag felt to the flyers like Indigo moving towards the same Ryanair sort of model. Now, here is the part that does not fit still. The people that you might expect to be nervous about this whole change, which are Indigo's investors, are unbothered.

Its parent, Interglobe Aviation, has watched its share price fall 9% over the past one year and trailed a nifty 50 by 4. And still, there is none of the alarm that you would hear from passengers. So why does the thing that worries Indigo's flyers not worry the people who own it? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nidda Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that's worth understanding and worth your time.

Today is Friday, the 18th of September. Let's start with why investors are so relaxed. You see, interglobe aviation is the only. listed airline stock in India that an investor can actually buy. Yes, SpiceJet is listed, but it has been sliding for years and it now flies just 35 planes. And Air India, as we all know, and as my colleague Rachel told you just a few days ago, has to fix itself before it can even consider a listing. Akasa Air is still a few years away from one. So to own a slice of Indian aviation, Indigo, is the only serious way in as of now.

And what sits behind that door is huge. Over the last 20 years, the number of people flying in India has gone from 15 million to more than 210 million, which already makes it the fifth largest aviation market in the world. And over the next 20 years, that figure is expected to triple again to almost 640 million, leaving only China and the US flying more passengers. But being the only option does not earn a free pass. Investors still want proof that Indigo can pull in more revenue out of every seat and that is what the light fare is really about.

You just have to look closely at the pricing and it gives their entire game away. You just have to go to the Indigo website and check it yourself. And you'll notice on most big routes, the gap between the standard fare and light is only 150 to 300 rupees. I just checked a Bangalore to Delhi flight for September 22nd and the standard fare is 8,364 rupees. This is including the check-in and the light fare is 8,207

with cabin baggage only, no check-in. So the difference came to 157 rupees. So a passenger essentially gives up 15 kg of check-in allowance to save What? Not even the price of an airport coffee. My colleague Shria Sani spoke to Sanjay Lazzar, an aviation expert who runs Aviah Lars consultants, and he's very clear about who comes out ahead. The benefit, he says, is always the airlines. Indigo saves 15 kilos of weight for a spread of about 300 rupees while charging 600 rupees for every extra kilo of baggage. Weight you see in the aviation sector is no small things, because lighter planes burn less fuel

and fuel is the number that torments every Indian carrier. Jet fuel swallows between 40 to 45% of their operating revenue even at around 110 a liter. Airlines cannot do anything about global crude prices, so they go after the costs that they can control, like the weight of your suitcase and even the weight of your suitcase and even the weight a plane climbs after takeoff, where they have begun running AI-driven trials to shave fuel off every departure. One more cost has been squeezing Indigo from its own cockpit.

Between the financial years 2024 and 25, Air India more than doubled its pilot count to 6,000. Indigo, meanwhile, added only 400, reaching about 5,450, and in the nine months since, it has slip to a little over 5,000. A domestic route, by the way, needs eight sets of pilots per aircraft and an international one needs closer to 11. We have a separate episode about all of this on specifically how Indigo ran out of pilots. I will link it to the show notes of this episode.

So Indigo seems to be stripping economy to the bone while climbing upmarket at the same time. Stay tuned for more on this. Along with light, Indigo has also launched Stretch, which is a cabin that sits between premium economy and business class. And also, a loyalty program called Blue Chips. Now, this loyalty move matters more than it looks. In India, frequent flyer programs were historically the territory of full-service airlines, like Jet Airways and later Air India.

Indigo has now walked straight into that, and Blue Chips crossed 2 million enrolled members, within the first six months of launch. This is why Sanja Lizar refuses to call Indigo a budget carrier. In his words, Indigo is not a low-cost airline. It is a hybrid airline operating at a very efficient level. To see how far the ground has moved, you have to go back to 2006 when Indigo launched. A jet airways ticket might start near $2,500 where Indigo sold the same seat closer to $1,000.

This was the obvious gap. Then Indigo's fares crept up into the same band as Air India and Vistara, airlines that still served a hot meal for free. A low-cost ticket had basically become as pricey as the one that came with free lunch. Now, both sides are meeting in the middle. Air India has borrowed the unbundling idea with its own basic fare, which lets flyers drop free extras like the meal. One airline is shedding frills while the other is adding them and then they are landing on the same product. But if you really think about it,

there is a shrewder game buried inside Light too. It is sold only on Indigo's own app and website and never through clear trip or make my trip or sky scanner. Over time, that teaches price sensitive flyers to open the Indigo app first before any travel aggregator. and this habit is what the Ryanair comparison misses. Ryanair keeps fares brutally low mainly by using cheaper secondary airports. For example, by landing at Bovey outside Paris instead of Charles de Gaulle.

Indigo is not trying to become that kind of an ultra-low-cost carrier. So then what is the purpose of all these new schemes like light and stretch? You see, the post-pandemic travel rush has run out of steam. Domestic passenger growth has cooled from 5.9% across the first seven months of 2025 to about 1.9% over the same stretch this year. This is obviously because of geopolitical tension also weighing in on the demand. Indigo's own planes are also flying a little emptier. So, unbundling is a way to coax those missing passengers back and fill seats in a soft season, which leaves flyers somewhere in a new.

territory. For years, the airline decided what your ticket included. Today, the only thing that a ticket really guarantees is the seat itself and everything wrapped around it has become a separate line that you can take or leave. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the can.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleagues Niktha Sharma and edited by Rati F.N.