interglobe aviation ltd bonus Management discussions

Global economic review

As the global economy seeks to emerge from the effects of the pandemic, prospects continued to remain highly uncertain during the reporting year. Owing to repeated waves of Covid-19, a subdued demand scenario and supply chain constraints, global GDP growth in 2021 was patchy. Escalating geopolitical tensions and conflict in Europe from February 2022 further inflicted supply shocks (especially in the commodity and energy sectors) to world economies, fuelling inflation.

In many countries across both advanced and emerging economies, inflation has now become a primary concern. In the US and Europe, it has touched its highest level in more than four decades, whilst in emerging market and developing economies, the rapid surge in food and fuel prices will pose temporary headwinds for economic growth.

Global outlook

Growth is expected to moderate in the near term, owing to war-induced commodity price escalations, and supply chain disruptions.

According to the International Monetary Fund (IMF)s World Economic Outlook (WEO), April 2022, global GDP growth is likely to moderate from 6.1% in CY 2021 to 3.6% in CY 2022. The estimated growth in emerging markets and developing economies (EMDE) in CY 2022 is marginally higher and predicted at 3.8%.

To curb rising inflation, central banks in most major economies are gradually resorting to liquidity tightening. On a more positive note, the Covid-19 vaccination coverage in many countries is accelerating, limiting the spread of infection and reducing the need for hospitalisation. These positive factors, along with the high rate of employment both in advanced and emerging economies, are expected to support growth over the medium term and long term, despite elevated inflation.

Indian economy

The year under review saw India grappling with two Covid-19 waves, causing significant loss of life and adversely impacting livelihood for many. However, growing vaccination coverage, stable and accommodative monetary policy by the RBI, and fiscal support by the Government of India have helped reduce the impact.

With the waning of the third wave of Covid-19 towards the end of the FY 2022, the Indian economy gradually began to recover, especially the non-contact sectors. However, geopolitical tensions in Curope, fuelling a significant rise in commodity prices, dented growth prospects. In the overall commodity basket, an unpredictable rise in the price of crude oil is of particular concern to India, as over 80% of its crude oil is imported.

Hence, there has been some loss of momentum in near-term growth, as global factors turned adverse. Looking ahead, domestic growth drivers are gradually improving with leading indicators of the

Indian economy, such as GST collections, power consumption, railway freight and air cargo show continued growth.

The provisional estimates for FY 2022 released by the National Statistical Office (NSO) places Indias real Gross Domestic Product (GDP) growth at 8.7%. On the supply side, real gross value added (GVA) rose by 8.3% in FY 2022, with its major components, including services, exceeding pre-pandemic levels.

The domestic industry has seen robust growth, particularly in the second half of FY 2022. The combined index of eight core industries registered a YoY growth of 10.4% in FY 2022, according to the Ministry of Commerce & Industry. As per the Department of Economic Affairs, PMI manufacturing has stayed in the expansionary zone continuously for nine months, contributing significantly to the recovery in FY 2022. Credit extended to industry also saw significant expansion, with loan growth to large corporates finally turning positive towards the end of FY 2022.

India outlook

India continues to be among the worlds fastest growing economies, supported by robust economic fundamentals.

Robust GST collection during FY 2022 is a testimony to the strong macroeconomic fundamentals of the Indian economy, amid recurring covid waves. The country is also successfully running the worlds second largest Covid-19 vaccination programme — having administered over 184 crore doses of vaccine as of March 31,2022, based on data released by the Department of Economic Affairs.

The steady decline in Covid-19 cases, and the subsequent withdrawal of restrictions across states, continue to strengthen economic activity.

Global geopolitical concerns may pose temporary headwinds; but the long-term growth story of the country remains intact on the back of resurgent agriculture, manufacturing and services sectors.

Industry overview

Global aviation industry

The pandemic has had a significant impact on travel and aviation, with airlines experiencing significant disruptions and a precipitous drop in passenger traffic. Global air travel was further negatively impacted by Omicron at the start of 2022, although to a lesser extent than the Delta wave in 2021. According to the Air Passenger Market Analysis Report by International Air Transport Association, industry-wide revenue passenger kilometres (RPKs) for CY 2021 rose by 21.6% compared to 34.2% in CY 2020 reflecting an industry in recovery. €ven so, the current figure represents only 41.6% of pre-Covid travel demand (for CY 2019). Domestic travel generally grew at a faster pace than international, owing to fewer travel restrictions.

The recent recovery in air travel has been unevenly distributed across geographies. Stringent travel restrictions have resulted in air traffic levels being 70% below 2019 levels in the Asia Pacific market for 2021, but the recovery is now taking hold. Although the last two years have been the most difficult in the history of the aviation industry, the sectors resilience has been encouraging. Supply side constraints persist, and they are expected to impact aircraft deliveries over the next 4-5 years. Fortunately, factors like pent-up demand, a strong rebound of disposable incomes, increased private capital influx and the general revival of the global economy bring cause for optimism that the recovery will continue.

Indian aviation industry

India has emerged as one of the fastest- growing aviation markets in the world. According to the Ministry of Civil Aviation, total traffic in India has registered a growth from 59.01 million passengers in FY 2021 to 94.99 million passengers in FY 2022 — a growth of 61.0%. Total freight carried in FY 2022 stood at 913.7 thousand tonnes as compared to 651.9 thousand tonnes in FY 2021, registering a growth of 40.2%.

A rising proportion of middle-income households, infrastructure development at leading airports and a supportive policy framework have collectively given positive impetus to the aviation sector. The Governments focus on privatising the sector will add a further push.

The Government of India has taken various initiatives to strengthen aviation. This included the calibrated opening of the domestic sector as the first wave of the pandemic ebbed, the introduction of air transport bubbles with specific countries (followed by scheduled international flights from March 27, 2022), privatisation and expansion of airports, a boost to the regional connectivity scheme - UDAN, and the incentivisation of maintenance, repair and overhaul set-ups (MROs) within the country.

Indias aviation sector is on the path of steady recovery from the demand suppression caused by the pandemic, as both corporate and leisure travel returns rapidly. However, the ongoing surge in fuel prices and weakening of the rupee pose short term challenges.

With increasing vaccination coverage, waning of the pandemic, the opening of the economy, reduction in travel restrictions, and the resumption of scheduled international services, the Indian aviation sector will again become an important contributor for socio-economic prosperity. Moreover, in the recently concluded Federal Aviation Authority (FAA) audit of the Indian aviation regulator, the Indian authorities have been successful in retaining FAA Category 1 status, making it easier for Indian carriers to expand internationally.

Rapid urbanisation and rising aspirational population

Increase in urban population is due to the growing corporate sector and is expected to be the major demographic contributors to growth in the Indian aviation sector. Being the second largest urban system in the world, Indian cities are home to ~11% of the total global urban population.

In the next few decades, half of the countrys population would be urban, as per the report on Reforms in Urban Planning Capacity in India issued by NITI Aayog. This will increased demand for leisure and air travel both, domestic and international.

Increased government support

The Indian aviation industry is boosted by numerous strategies and policies. Besides private sector participation, the government has welcomed foreign investment. It has allowed 100% FDI under the automatic route in scheduled air transport services, regional air transport services and domestic scheduled passenger airlines. The Indian government has also prioritised infrastructure in the near term, resulting in increased liberalisation. The government has set a target of growing the number of airports from 140 to 220 by 2025.

Updated operating procedures

Paying attention to Covid protocols, airlines have taken several measures over the past two years to ensure the safety and convenience of passengers, providing contactless services and removing avoidable hassle, which has helped increase customer confidence in air travel. An increased perception of air travel as a safe mode of transport is leading to a modal shift in many domestic markets.

Growth in private sector investment

Increased private sector investment in airports is projected to give an unprecedented push to the Indian aviation industry, according to CRISIL. Investments worth Rs 36,000 crores have been planned under the Public- Private Partnership (PPP) mode for the development of greenfield airports and related infrastructure.

Opening up of the travel and tourism sector across the globe

With the increase in vaccination rates, both globally and within India, where 80% of adult population is fully vaccinated, travellers are gaining confidence to travel more and further. A recovery in tourism is expected to boost demand for air travel.

Updates on the initiatives taken by the Government during FY 2022:

RCS-UDAN (regional connection initiative)

In CY 2021, 168 routes were awarded under UDAN 4.1. As part of the objective to improve connectivity across India, 100 routes have been launched. Additionally, three heliports and 9 (regional/ Tier 2/ Tier 3 cities) airports were made operational.

Liberalised FTO (Fair-Trade Organisations) policy

In September 2021, the AAI announced a liberalised FTO policy to support the growth of the aviation industry in the country. Under the extant policy, airport royalty was abolished, and the annual fee was rationalised significantly for new FTOs.

/ Airport monetisation and development

In a step towards development of airports, six airports including Lucknow, Ahmedabad, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram, have been handed over for management under the PPP model. Under the National / Monetisation Pipeline, 25 additional airports have been identified for monetisation in the upcoming years.

Company overview

IndiGo ranks among the most prominent low cost carriers worldwide. It is the largest player in the aviation sector in India and was ranked as the 6th biggest carrier in the world, measured by passenger volume in the OAG (Official Airline Guide) Frequency & Capacity Statistics in March, 2022. While this ranking was aided by the slower recovery of several other markets, IndiGo now sits comfortably among the top twenty airlines worldwide by most measures, including market capitalisation. Your Company primarily focuses on three pillars of customer service — affordable fares, being on-time, and delivering a courteous and hassle-free experience to its passengers.

With its fleet of 275 aircraft on March 31, 2022, the airline operated 1,450+ daily flights, connecting 73 domestic and 15 international destinations.

Operational highlights

Particulars For the Year ended March 31st
2022 2021 Change
ASK (in millions) 70,386 45,425 +54.9%
RPK (in millions) 51,774 31,519 +64.3%
Passenger Load Factor (%) 73.6% 69.4% +4.2 pts
Number of passengers carried (in thousands) 49,803 30,693 +62.3%
Block hours 740,575 497,739 +54.4%
Number of destinations served as of the period end* 88 65 +35.4%
Total number of flights 402,353 260,311 +54.6%
Number of aircraft at period end 275 285 -3.5%

*At March 31,2021 represents domestic destinations only as international scheduled services were suspended by the Government.

Financial highlights

Particulars For the year ended March 31st
2022 2021 Change
EBITDAR Margin 4.4% 4.3% 0.2 pts
Net Profit Margin -23.8% -39.7% 15.9 pts
RASK (Rs.) 3.73 3.30 12.8%
CASK (Rs.) 4.60 4.58 0.4%
CASK Ex-Fuel (Rs.) 3.22 3.74 -13.8%
Return on Net Worth (%) NA* (193.91) NA

*This ratio is non-determinable as of March 31,2022 due to negative net worth which is on account of losses of current and previous years.

Financial performance


Passenger ticket revenue: Passenger ticket revenue increased by 85.6% from D 118,369.80 million in FY 2021 to D 219,715.94 million in FY 2022.

Revenue from ancillary products and services: Revenue from ancillary products and services primarily include cargo, special service requests, ticket modification and cancellation, in-flight sales and tours. Revenue from ancillary products and services increased by 55.3% from D 23,738.29 million in FY 2021 to D 36,861.26 million in FY 2022.

Other income: Other income is primarily comprised of financial income on cash and other non-operating income. Other income decreased by 30.0% from D 10,369.64 million in FY 2021 to D 7,255.98 million in FY 2022.

Revenue per Available Seat Kilometre (RASK): RASK increased by 12.8% from D 3.30 in FY 2021 to D 3.73 in FY 2022, driven by increase in yields and passenger load factors.


Total expenses increased by 52.6% from D 214,956.65 million in FY 2021 to D 328,102.09 million in FY 2022.

Aircraft fuel expenses: Aircraft fuel expenses increased by 153.1% from D 38,312.77 million in FY 2021 to D 96,952.36 million in FY 2022, against 54.9% increase in capacity, on a year on year basis, primarily due to increase in IOCL ATF prices.

Aircraft ownership cost: Aircraft ownership cost comprises of aircraft and engine rentals, supplementary rental and aircraft maintenance cost, depreciation and amortisation, and net interest expense.

Aircraft ownership cost increased by 26.0% from D 106,319.95 million in FY 2021 to D 133,914.19 in FY 2022.

Employee benefits expense: Employee benefits expense increased by 5.8% from D 32,954.92 million in FY 2021 to D 34,864.43 million in FY 2022.

Foreign exchange ((gain)/loss): Foreign exchange losses increased from D (5,230.26) million in FY 2021 to D 9,408.38 million in FY 2022.

Other expenses: Other expenses increased by 28.6% from D 19,104.10 million in FY 2021 to D 24,563.07 million in FY 2022.

Cost per Available Seat Kilometre (CASK): CASK increased by 0.4% from D 4.58 in FY 2021 to D 4.60 in FY 2022, primarily driven by increase in fuel cost and foreign exchange, offset by higher capacity deployment.

The Company reported a net loss of D 61,618.45 million in FY 2022 against a net loss of D 58,064.27 million in FY 2021. This resulted in the Return on Equity for FY 2022 to be 102.9% as compared to -5,237.7% in FY 2021.

Balance sheet

IndiGos total cash decreased by 1.8% to D 182,275.34 million as of March 31, 2022, comprising of free cash of D 77,631.65 million and restricted cash of D 104,643.69 million. Total debt for the Company was D 368,778 million, including capitalised operating lease liability of D 316,656 million, as of March 31,2022.

Company outlook

With the commencement of operations in 2006, IndiGo has been on a track of rapid growth and has added capacity at an expeditious pace. Operations in the last two years have been impacted by Covid-19 pandemic, which had led to reduction in capacity deployed. Since the reduction of Covid -19 related restrictions in India and abroad, IndiGo has ramped up capacity and capitalised on its strong network serving 88 scheduled destinations and operating over 1,450 daily departures at the end of fiscal year 2022 and expects capacity deployment in fiscal year 2023 to be more than pre-Covid levels.

Going forward, IndiGo is now looking to expand its network presence by increasing connectivity in the non-metro cities of India and expanding the international operations. As a part of our international expansion strategy, IndiGo continues to enter into strategic partnerships and cooperation agreement and now has codeshare agreements with five international airlines. Such partnerships will help IndiGo access new markets and a new set of customers. IndiGo expects international operations to be a substantial part of its operations in the long term.

IndiGo believes that low operating costs are fundamental to the success of an airline. It remains relentlessly focused on maintaining its cost advantage and has taken various steps to further optimise efficiencies and improve productivity across the organisation.

Risk management

The Company has adopted a robust risk management policy, approved by the Board of Directors, to identify, evaluate and mitigate business risks and protect stakeholder interests.

Set forth below are some of the risks that may potentially have an adverse impact on our business, financial results and our performance outlook, along with the initiatives taken by IndiGo to mitigate their impact.

• Pandemic risk:

An outbreak of a communicable disease (as with the pandemic) across the globe causes air travel to inevitably become the focus of much attention due to the potential for unrestricted movement of people to increase infection rates. Global and national efforts to limit the spread of any pandemic can result in disrupted operations, which can potentially lead to erosion of our reputation and also decrease in demand for travel. The adverse impacts of Covid-19, or possible outbreaks of any other pandemic or similar public health threat in the future can significantly affect our operations and result in financial losses.

Your Company acted in accordance with national and international Covid behaviour protocols by ensuring compliance with applicable regulations and guidelines by its employees and taking care of the safety of its customers. Your Company took the lead on many initiatives to provide customers with a sanitised aircraft and adopted many additional safe boarding and disembarking procedures. IndiGo also proactively conducted vaccination drives across India for all employees and their family members. Additionally, to provide timely support to employees, multiple initiatives, such as setting up a medical hotline, tie-ups with hospitals for urgent treatments, educational campaign, and a partnership with My Wellness App, were introduced.

• Operational issues with aircraft and engines:

In the past, IndiGo had experienced operational issues with certain A320 NEO engines, which had impacted its operations. The airline industry is often compelled to rely on a single or very limited number of suppliers for key systems. Reliance on single supplier to source the aircraft and

spare parts, and the failure to obtain timely deliveries, additional equipment or support, can impact our financials materially. Further, any incident or accident could result in personal injury and/or loss of life, damage to aircraft, damage to reputation, and increase in other incidental costs.

Your Company, in addition to operating relatively newer aircraft models, has worked with the engine supplier to ensure maximum possible safety, and secured upgraded engines to replace existing ones. Additionally, to meet the interim operational challenges, IndiGo has procured additional spare engines from the supplier to reduce operational disruptions.

• Exceptional variation in fuel prices:

Aircraft fuel expenses are the most significant expense of our total cost. The price of fuel cannot be accurately predicted because of numerous economic and political factors and events that govern them. Our operating results are negatively impacted by any adverse movement in fuel prices.

IndiGo focuses on improving fuel efficiency of its fleet to bring down the operating costs. It maintains a young fleet resulting in lower fuel consumption. This is aided by the large share of A320 NEOs in our fleet which are ~15% more fuel efficient compared to the older A320 CEOs. Moreover, IndiGo is working towards eliminating the entire A320 CEO Fleet by FY 2023 in a phased manner, well ahead of most other global carriers. Additionally, IndiGo adopts various fuel-efficient practices such as single engine taxis and optimising flight path. Increase in fuel price is also partially offset by optimising fares keeping in mind prevailing market conditions of course.

• Adverse movement in foreign exchange:

Our costs including aircraft and engine lease rentals, aircraft and engine maintenance, and aircraft insurance are denominated in foreign currency. Adverse movement in foreign exchange may, hence, significantly impact our profitability.

The foreign currency exposure is partially offset through non-INR revenue. Further, the foreign exchange liability, owing to supplementary rental liability, is hedged by deposits maintained in foreign currency. Any mark to market impact of the foreign exchange exposure, largely pursuant to capitalised lease liability, is being recorded in the books periodically.

• Competition in the airline industry:

The airline industry is highly competitive. IndiGo faces competition from other low-cost carriers, as well as full-service carriers that operate on our routes. It may also face competition from airlines, alliances, and upcoming new entrant airlines.

To remain competitive, IndiGo continually focuses on cost leadership, industry leading customer service and on-time performance. In addition, IndiGo continues to work on launching new markets and flights which enhance connectivity across the network. IndiGo also optimises its schedule to maximise the utilisation of our assets.

Your Companys codeshare partnership with leading global airlines gives the customers added flexibility and comfort and helps us extend reach beyond IndiGos own network. IndiGo has partnered with leading banks to launch a co-branded credit card Ka-ching and will be enhancing focus on customer loyalty going forward. IndiGo also undertakes innovative marketing campaigns to project a powerful brand image among its customers.

• Changes in government regulations:

The civil aviation industry in India is regulated by the Ministry of Civil Aviation (MoCA), including Bureau of Civil Aviation Security (BCAS), the Directorate General of Civil Aviation (DGCA), the Airports Authority of India (AAI), and the Airports economic Regulatory Authority of India (AERA). The regulations are extensive, complex and cover all major aspects of airline business and operations, including training, licenses, aircraft acquisitions, routing and passenger facilitation etc. Any changes in such regulations, or the imposition of additional restrictions and conditions, can affect our business and operations.

IndiGo keeps itself abreast of all regulatory changes and ensures timely compliance, as amended from time to time. We maintain close communication with regulatory authorities and airports to maintain affordable and high-quality air connectivity across the nation.

• Inability to recruit and retain key talent:

Our business requires us to attract and retain highly skilled, dedicated and efficient management personnel and other critical employees. Any shortfall in the availability or our inability to hire, train or retain qualified employees may have an adverse impact on our operations and our ability to grow.

To maximise talent retention, IndiGo has a progressive Human Resource policy and a succession plan in place for crucial leadership positions. Additionally, to ensure there is no shortfall of crew, there is a dedicated team which creates manpower plans which accounts for attrition and training requirements. In addition, for critical functions like Engineering and Flight Operations, IndiGo has in place trainee programmes that continues to provide it with skilled employees. Your Companys training academy, ifly, continues to be at the forefront of training, aviation ready workforce with their in-depth training curriculum.

• Breaches in IT/ Cybersecurity:

Airlines are heavily dependent on IT and complex network technology. These complex systems and technologies are subject to interruptions and delays caused by catastrophic events, acts of war or terrorism, power loss, computer and telecommunications failures, cyberattacks and security breaches and similar events or disruptions. Any such system interruptions or security breaches may disrupt our normal business operations, potentially leading to loss of business, subject us to data breach and can result in multi-pronged impact including regulatory actions, operational interruption, reputation loss, intellectual property loss etc.

IndiGo takes the cybersecurity threat very diligently. Its cybersecurity structure is aligned with industry standards such as National Institute of Standards and Technology (NIST) and ISO/IEC 27001. It follows the Defence in Depth approach to cybersecurity and has implemented controls for prevention, detection, and response to cyberattacks. IndiGo is continuously making every effort to maintain and evolve its cybersecurity framework.

• Reputation risk:

IndiGo is exposed to reputation damage if any of its aircraft is subject to an emergency, accident, terrorist incident or any other disaster. Further, any adverse experience or harm arising to customers or vendors, can also potentially lead to damage to IndiGos reputation.

To effectively manage any adverse event, IndiGo has a detailed crisis response mechanism which clearly outlines the flow of communication and protocols. IndiGo also has a dedicated emergency response team, and processes and procedures in place to immediately handle such events.

• Environmental, social and governance risk:

As the environmental impact of air travel comes under increased government and regulatory pressure, there are risks of higher costs levied on the industry to offset its carbon footprint. Beyond carbon emission, other sustainability efforts such as noise mitigation and waste management have been gaining increased focus from various stakeholders. As more institutional investors are considering €SG as a factor when making investment decisions, this could result in lower investment appetite in the aviation sector in general.

The Management and the Board of your Company has embraced the €SG platform as an important strategic platform for business.

ESG is being integrated formally in each of the functional aspects of our operations. Apart from the various social initiatives undertaken and various governance measures in place, which are being continually monitored and improved upon, IndiGo also has a roadmap for €SG, beginning with an industry standard €SG report, published alongside this annual report, and further intensifying activities across the three dimensions of ESG. IndiGos focus is to transition our €SG efforts into a strategic advantage, positioning IndiGo as a responsible airline.

• Fraud and exploitation of operational disruption:

The control framework and monitoring of potential criminal activity may have become weakened due to reduced headcount and remote working, leaving gaps in fraud detection and creating opportunities for malicious activity by customers and staff. The pandemic has also presented shortterm liquidity challenges, leading to cost reduction initiatives which may impact the control environment and monitoring activities.

• Liquidity management and profitability:

Covid-induced capacity restrictions led to a lower capacity deployment leading to a higher fixed cost per unit. Airlines by nature have fixed cost structures with long term capital commitments, the fleet composition and size are not easy to change in a short period of time. During exceptional times, this can impose a significant burden on cash management and liquidity.

Various measures were taken to restrict the cash burn and mitigate the adverse impact on the profitability during the Covid waves, while ensuring our readiness to serve the customer post-Covid recovery.

To ensure adequate liquidity, IndiGo has established working capital limits with its partner banks, strong relationships with the financial institutions from which it leases aircraft, as well as improved credit terms with its O€M and supplier partners. IndiGo is constantly working to improve its cost position in order to improve financial performance and profitability, which includes the transition to a more fuel-efficient fleet, amongst many other measures. The Board closely reviews and monitors the liquidity and the profitability of the organisation and provides guidance to drive improvement in these critical areas.

• Employee related risks:

Labour actions and strikes can cause disruption to operations and profitability. This may also lead to negative impact on employee relations and morale.

IndiGo engages in multiple programmes to develop skills of staff, and build employee connect through a structured process. It has implemented rewards and recognition programmes to boost employee morale and honour the most valued employees. With 6e Speaks- its twice-a-month pulse feedback programme - IndiGo continually get inputs and feedback on engagement levels of its employees. Based on the results, it takes consistent actions so as to mitigate this risk.

• Airline safety:

Incident or accident leading to personal injury and/or loss of life, damage to aircraft, increasing cost due to global aviation incidents can affect the Company negatively.

IndiGo tracks a monthly report on major Flight Operations and other operational performance and incident trends, as well as other multiple Safety Performance Indicators (SPI) on a regular basis. It also conducts safety audits regularly. Additionally, IndiGo is a member of IATA Incident Data Exchange Programme, to ensure its safety performance is at par with, or ahead of, global peers.

• Airline security:

IndiGos response/ preparedness for aircraft hijacks, as well as insider threats, such as exploitation, tampering, fraud, espionage, theft, and sabotage due to malicious intention (internal/ external).

As a security measure, IndiGo does background checks of all employees who have access to restricted areas. It also has a Vigilance Team at all major stations to prevent theft, fraud, and malicious intent which conducts spot and stop checks, including random screening of staff and surprise check of AEP (Airside Entry Permit). It also conducts periodic background verification during the IAEP renewal process.

• Revenue risk:

Due to uncertainty caused by the pandemic, there have been major fluctuations in demand over last two years. The impact was higher on corporate and international travel, due to the changing business and regulatory environment.

IndiGo actively evaluates, through scenario building, passenger demand forecasting, and fine-tunes its capacity deployment and pricing to optimise the opportunity and financial performance.

Human resources

As a purposeful organisation, your Company truly believes in the value of having motivated people to deliver superior customer satisfaction, given the airline business is above all, a service business. It is this belief that drives your Company to invest in its employees. IndiGo constantly reviews its business priorities and supports the workforce with the required skills, knowledge, mindset, and tools to stay ahead in meeting customer expectations. Your Company continues to execute learning via digital platforms, classroom sessions and practical orientation at our airports and on our aircraft.

Your Companys learning academy ifly is entrusted with creating the IndiGo spirit, enriching IndiGo culture and training employees on business priorities and future leadership behaviour. For example, programmes such as Career Buddies support aspiring employees in making the right career decisions within the organisation, creating a culture of growth. Leadership Runway, a professional skill development programme for senior cabin crew, equips them with highly transferable skills for future roles within the organisation. Beyond these, ifly continues to develop hundreds of cabin crew via new employee training, as well as refreshers on an ongoing basis.

With the changing environment, your Company draws inputs from 6ESpeaks- the employee engagement survey, customer feedback and regulatory expectations, and devises action plans based on these inputs.

Your Companys commitment to a high- trust, high performance culture has been reinforced with IndiGo being certified as a Great Place to Work by the Great Places to Work Institute for two years in a row, since IndiGo restarted participation in CY 2021. This further strengthens your Companys position as one of the best workplaces in India, offering a safe and inclusive work environment.

Your Company continues to promote diversity and inclusion in the workplace.

For this, we create learning programmes and awareness campaigns to help employees understand the qualities of inclusive leaders and recognise biases that take place in critical processes like hiring. Also we demonstrate the appropriate way to deal with people of different genders and different backgrounds. As of March 31, 2022, your Company had 230 women in people management roles, and 540 women pilots, by far the highest number of women pilots in Indian aviation.

Your Company has several programmes aimed at developing pilots from within and from our employees families. 6e Family Fly, is a programme aimed at supporting members of our employees families to be pilots, and 6e Fly High is aimed at supporting our own employees desirous of becoming pilots. With our steady induction of graduating Cadet Pilots and continuous programme of internal promotions to Captain positions, IndiGo believes that it has a robust practise of developing pilot talent, something that is key to the Companys future. In addition, it also has about 30 employees with disabilities. IndiGo hopes to onboard 30 more people with disabilities in FY 2023.

Your Company is deeply aware that a highly engaged and motivated workforce leads to higher levels of customer service and is working on cementing the longterm employee culture that has been built over the last 16 years. As of March 31, 2022, IndiGo employed a dynamic set of 26,164 employees, which included 3,791 pilots and 6,398 cabin crew.

IndiGo takes a digital flight

IndiGos digital journey has taken off in earnest. Responding to the ever-growing challenges and opportunities in the areas of customer experience, revenue maximisation or costs reduction through increased productivity and optimisation techniques, IndiGo has commenced several aligned digital initiatives. IndiGo has crafted a clear strategy and blueprint for its digital transformation journey to be future-ready.

Beginning with the combination of the erstwhile separate IT and digital teams into one entity viz. IndiGo Digital, existing teams have been augmented with top talent, to drive digital at pace. Further, a customer data platform (CDP) start-up has been engaged to build IndiGos next generation intelligent customer data hub. Rapid experimentation has commenced on how IndiGos assets, its data, and the trust it engenders in millions of customers, can be leveraged to build multiple digital marketplaces, yielding new revenue streams. Innovations such as IndiGos homegrown digital solutions for airport passenger services, has successfully undergone trials at some airports and a broader rollout is being planned. Several actions are underway to improve IndiGos digital channels including forming new agile squads to deliver the website and app features in rapid sprints, reworking the underpinning technology architecture and the user experience design. Efforts are underway to digitise the years of operational data that can result into operational efficiencies through productivity enhancement and process optimisation.

Internal control systems and their adequacy

IndiGos internal controls and risk management policies are validated periodically with suitable review mechanisms in place. Our internal control procedures are frequently reviewed and updated to ensure compliance with various policies, practices, and statutes in keeping with the organisations pace of growth and increasing complexity of operations. IndiGo has in place systems and processes commensurate with our size and nature of business and maintains a system of internal controls designed to provide reasonable assurance regarding the following:

An independent internal audit (employing globally acclaimed firms) is carried out to ensure the adequacy of the internal control system and adherence to policies and practices. The scope of the internal audit activity is guided by the annual audit plan, which is approved by the Audit Committee of the Board. The Audit Committee of the Board of Directors regularly reviews the reports submitted by the independent internal auditor and the adequacy and effectiveness of internal controls.

Cautionary statement

Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified / non-identified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, global pandemic like COVID-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving risk(s), inter-alia, to the Company and the environment in which it operates. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based, are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.

On behalf of the Board of Directors of InterGlobe Aviation Limited
Venkataramani Sumantran
DIN: 02153989
Ronojoy Dutta
Whole Time Director and Chief executive Officer
DIN: 08676730
Date: May 25, 2022
Place: Gurugram