Interglobe Aviation Ltd Management Discussions

Economic review - Global

The year that passed by reaped the benefits of effective monetary policy framework across much of the global economy. Despite dogged concerns of global recession, the contractionary monetary policy proved effective in steering economic stability and growth.

This was evident as global inflation eased from its mid-2022 peak, even as economic activity continued to expand steadily. This stance from central banks across the world was aided by deployment of household savings accumulated during the pandemic across major advanced economies, that further fuelled economic growth.

The probability of a smooth landing to the global economy has increased, with growth which appears resilient for the most part, even after allowing for some variations across

countries and regions. As per the International Monetary Fund (IMF), global growth is projected to maintain a steady pace of 3.2% for CY 2024 and CY 2025. This growth rate, while consistent, falls below historical averages, subdued to some degree by factors such as high borrowing costs, some geoeconomic fragmentation, and ongoing geopolitical tensions which are disrupting many critical trade routes. Geo-economic fragmentation may contribute to increased volatility in commodity and currency markets, depending on price elasticity of demand and supply. Despite these challenges, emerging markets and developing economies are expected to remain key drivers of global output, providing significant support to the world economy. As per the IMF, emerging markets and developing economies (EMDEs) are expected to sustain robust growth, projected at about 4.2% in CY 2024 and CY 2025. This represents only a slight moderation from the 4.3% growth rate of CY 2023.

Economic review - Indio

According to the IMF, India retained its position as the fastest-growing major economy, with an estimated real GDP growth rate of 7.8% in FY 2024. This performance exceeded IMFs initial estimates released in April 2023 by 100 basis points. During the same period, the Indian central banks stance was in line with that of many other central banks across developed economies. To control inflation, the Reserve Bank of India (RBI) kept policy rates unchanged throughout the fiscal year and reiterated the same in the latest monetary policy committee meeting held in April 2024.

Even with the backdrop of a contractionary monetary policy environment, the Indian economy experienced strong

momentum in FY 2024. As per RBI, for the third quarter of FY 2024, real GDP increased by 8.4% year-over-year, which was the highest in six quarters. This growth is supported by the Governments initiatives ond strategic copitol allocations that promise to strengthen the nations infrastructural and industrial capacities. Private consumption remained robust on the back of rising discretionary spending and improving income levels. In addition to that, growth was fuelled by private-sector investments, indicating a revival in the capital expenditure cycle.

This is expected to increase as capacity utilisation for several sectors has reached a level that would necessitate new investments.

Share of Private Final Consumption Expenditure in GDP

Looking ahead, India is expected to remain the fastest- growing major economy in the world with growth estimated at 6.8% during FY 2025, as per the IMF. The Indian economy is expected to gain a boost from private consumption on account of uptick in rural demand, rising consumer confidence, and optimism around employment and income levels.

Looking beyond next year, as per IMF, India is on track to become the worlds third-largest economy by 2027, driven by robust expansion of economic activity across sectors.

Indias path is expected to be buttressed by a focus on infrastructural investments, technological advancements, rising disposable income, a young and growing working population, and reforms aimed at fostering growth and competitiveness on the global stage.

Industry overview

Global aviation industry

In 2023, global demand for air travel continued to be strong, sustaining the rebound from the impact of COVID-19. As per the International Air Transport Association (IATA), the industry witnessed growth of 36.9% year-over-year in 2023, measured in revenue passenger-kilometres (RPKs), reaching 94.1% of pre-Covid (2019) levels. This is a significant increase from 2022, when it stood at 68.7%. Capacity has also recovered, resulting in an industry-wide load factor of 82.3%, which was 0.3 points lower than the load factor in 2019.

This strong performance may be attributed to strong domestic demand worldwide. Domestic traffic in 2023 managed to surpass 2019 levels for the first time with a 3.9% increase. Whereas international traffic continued to trail behind 2019 levels but maintained a steady and robust growth rate. Industry-wide international revenue passenger kilometres (RPKs) reached 88.6% of 2019 levels.

This recovery was observed across all regions, with North American carriers leading the revival, benefitting from an early reopening and strong domestic demand. The reopening of the Chinese market in January 2023 also played a crucial role in accelerating global passenger traffic recovery in 2023, particularly revitalising travel in the Asia-Pacific region. This recovery was further supported by the ongoing recovery in large markets like India.

Air cargo capacity measured by available cargo tonne kilometres (ACTKs) in 2023 grew 11.3% year-over-year, recovering to pre-pandemic levels and subsequently registering a 2.5% increase from 2019.

Air passenger market in detail - 2023

	World		Year-over-year %		Year-over-year % vs. 2019
	Share*	RPK	ASK	PLF (%-pt)	RPK	ASK	PLF (Level)	PLF (%-pt)
Total Market	100.0%	36.9%	31.0%	3.6%	(5.9%)	(5.6%)	(0.3%)	82.3%
Africa	2.1%	36.4%	35.5%	0.5%	(6.6%)	(7.9%)	1.0%	72.8%
Asia-Pacific	31.7%	96.3%	75.1%	8.7%	(14.0%)	(12.3%)	(1.6%)	80.3%
Europe	27.1%	20.2%	15.8%	3.1%	(4.8%)	(3.9%)	(0.8%)	84.4%
Latin America	5.5%	17.0%	14.5%	1.8%	0.4%	(0.4%)	0.7%	83.2%
Middle East	9.4%	32.3%	24.6%	4.7%	(1.9%)	(6.6%)	3.8%	80.0%
North America	24.2%	15.3%	14.0%	0.9%	2.4%	2.8%	(0.4%)	84.4%

Indian aviation sector

In FY 2024, the Indian aviation sector experienced a significant growth to not only fully recover but also grow beyond pre-pandemic levels. This recovery is comprehensive, with both domestic and international passengers surpassing the levels of FY 2019. Overall, in FY 2024, the total number of air passengers was 10.3% higher than in FY 2019.

The increase in demand for international air travel exceeded that of domestic travel, with international travellers increasing by 14.6%, while domestic travellers increased by 9.5% as compared to pre-Covid levels.

The Indian aviation sector made a significant impact on the global stage as all the Indian carriers collectively placed record-breaking orders for more than 1,150 aircraft over the

last 15 months. This is supported by the unprecedented scale and speed of both greenfield and brownfield airport infrastructure expansions. India has the worlds largest and youngest workforce among the worlds top economies and boasts a rich reserve of human capital, poised to meet the rising demand for aviation professionals. The heightened interest from Original Equipment Manufacturers (OEMs) to expand their facilities in India (encompassing design, manufacturing, technology, and service activities) reflects the growing appeal of India as a key global aviation hub.

Taking into account the economy, investments and policy- changes together, one can say that the Indian aviation industry is undergoing pivotal changes to support unprecedented growth in the years to come.

Growth drivers

Rising middle class and increased disposable income

As per industry research, Indias middle-class population is projected to grow significantly and

reach 583 million by 2025. This demographic shift is crucial as it relates to more disposable income for discretionary spending, including travel. The increase in disposable income is also evident from the GDP per capita, which has been on a consistent upward trajectory.

Under penetrated aviation market

While the Indian air passenger market ranks as the third largest globally and the second largest in the Asia-Pacific region, it is widely considered one of the most under penetrated aviation markets worldwide. As per Ciriums data and the United Nations Development Programme, the domestic seats per capita in India stood at only 0.13, compared to 3.09 in the U.S., and international seats per capita at 0.06, compared to 0.88 in the U.S. and 4.28 in the U.K. for CY 2023. Additionally, as per Indias Ministry of External Affairs,

only 6.5% of Indians hold valid passports. This level of underpenetration highlights the immense growth potential of the Indian aviation market, presenting an opportunity to make air travel more accessible to the worlds largest diaspora.

Pivotal role of Tier 2 and Tier 3 cities

Tier 2 and Tier 3 cities in India are home to a large and diverse population that are increasingly becoming urbanised. As economic activity continues to diversify and expand across these cities, there has been a noticeable increase in income levels. This rise in disposable income is largely due to the proliferation of new businesses, expansion of manufacturing and service industries, and increased investment in local infrastructure.

Airport Infrastructure

The Government of India remains committed to invest

^trillion for development of greenfield and brownfield airports across the length and breadth of India. These investments will augment passenger handling capacity and passenger experience as the number of airports is expected to Years grow from 140 in 2019 to 220 in the coming years.

Investments in capacity

As per Ciriums data, Indian carriers collectively added over 100 aircraft during FY 2024 to end the year with a fleet of more than 850 aircraft Significant additions were made to the total outstanding order book for Indian carriers on account of large aircraft orders. These timely orders bode well for the sector, as new aircraft availability, globally, remains constrained and expanding aircraft production capacity is a timeconsuming process. Therefore, over the next decade, Indian carriers are better poised to sustain planned capacity growth.

Continued focus on regional connectivity

The Regional Connectivity Scheme (RCS) - Ude Desh Ka Ram Nagrik (UDAN) - is a Government of India initiative aimed at democratising air travel across the country by enhancing connectivity to unserved and underserved regions of India. The initiative completed six successful years of operations in the second half of FY 2024.

Rs of March 31, 2024, 500+ RCS routes were operationalised, with over 13.5 million people having travelled as beneficiaries of the scheme. Backed by investments in tourism infrastructure, UDRN will continue to rapidly expand regional air services, thus promoting growth and accessibility of air travel in the country.

International expansion

Rs of December 2023, India had Rir Services Agreements (ASAs) with 116 countries. R large number of Indias ASAs provide sufficient capacity entitlements to support the growth plans of Indian carriers. India is currently directly

connected to 52+ countries and 100+ countries via indirect routes. The Government of India continues to support the development of a robust airline ecosystem to improve connectivity to all markets including the underserved and unserved countries.

Demand for international travel

Somewhat uniquely, more than 50% of the Indian international air travellers are served by foreign airlines. Over the past five years, there have been positive developments, and market share for Indian carriers has

increased from ~39% in 2018 to ~44% in 2023.

This trend is expected to continue as Indian carriers continue to expand their international operations and offer direct connectivity to newer and unserved international destinations. A growing number of foreign destinations have introduced visa waivers for Indian tourists, and this, coupled with improved connectivity, is further incentive to the prospects of international travel for many Indian citizens. Internationalisation of Indian aviation sector offers Indian carriers a big opportunity to capture a higher share of this rapidly expanding market.

Company overview

IndiGo is the largest airline in India with over 2,000 daily flights across 88 domestic and 33 international destinations.

IndiGo remains committed to its purpose of Giving wings to the nation, by connecting people and aspirations.

In a short span of 18 years, IndiGo has become the seventh-largest airline in the world in terms of daily departures and is the first Indian airline to operate a large fleet of 350+ aircraft. IndiGo also became the youngest airline globally to welcome 100 million customers in a calendar year.

IndiGo has four key customer promises: affordable fares, on-time performance, courteous and hassle-free service, and an unparalleled network, making it one of the most reliable airlines globally.

IndiGo continues to build on its success story with its strategy of Towards new heights and across new frontiers which has three strategic pillers of Reassure, Develop, and Create. IndiGos vision is to be Indias preferred airline for connectivity in and with India, and by doing so being one of the leading airlines in the world.

Company outlook

India is home to the worlds largest population and soon will become the third-largest economy in the world. There is need for an aviation ecosystem that matches the size and potential of the country. IndiGo is committed to its mission of boosting economic growth, social cohesion, and mobility in India by developing its own model with affordable air-connectivity along with on-time and hassle-free travel experience across the country and globe.

IndiGo currently serves 120+ destinations, and offers services across 520+ direct city pairs and 1,850+ indirect city pairs. IndiGos unparalleled network offers connectivity across the length and breadth of the nation, connecting people and fuelling aspirations.

IndiGos trajectory, from the inception, has been shaped by its keen focus on its customers and their needs. Keeping in mind Indian economic growth and the evolving aspirations of Indian society, IndiGo will launch a tailor-made business product on the busiest and business routes of the country. This new initiative is the outcome of IndiGos constant endeavour to evolve and innovate its service offering, acutely tuned to the needs of its customers.

Further building on its unparalleled network in the domestic market, IndiGo continues to move forward on the journey towards internationalisation. IndiGo has forged strategic partnerships with eight international airlines enabling additional connectivity to 49 international destinations.

IndiGo is in discussions with other international airlines to further strengthen its international network.

To support IndiGos own international route expansion, the large outstanding order book of around 980 aircraft includes longer range A321XLRs and A350-900 aircraft. Together with new investments in people, processes and technology, IndiGo will extend its range to mid-haul and long-haul markets. Aided by its planned expansion in international sectors, IndiGo aims to double its scale by the end of this decade.

IndiGo remains conscious that low operating costs, laser sharp focus on customer service, a well-executed product, and fleet strategy are fundamental to success in the airline business. IndiGo will continue to keep these at the core of its strategy, while building capabilities to serve an increasing number of customers every year and in turn Giving Wings to the Nation.

Operational highlights

Particulars	FY 2024	FY 2023	% Change
ASK (in million)	139,281	114,359	+21.8%
RPK (in million)	119,703	93,889	+27.5%
Passenger Load Factor (%)	85.9%	82.1%	+3.8 pts
Number of passengers (in thousands)	106,728	85,591	+24.7%
Block hours	1,353,475	1,138,263	+ 18.9%
Number of destinations served as of the period end*	118	100	+ 18.0%
Total number of flights	697,500	597,829	+ 16.7%
Number of aircraft at period end	367	304	+20.7%

*Operational destinations

Financial highlights

Particulars	FY 2024	FY 2023	% Change
EBITDAR Margin	25.5%	13.4%	12.0 pts
Net Profit Margin	11.9%	-0.6%	12.4 pts
RASK (H)	4.96	4.80	3.2%
CASK (H)	4.38	4.83	9.3%
CASK Ex-Fuel (H)	2.66	2.76	3.6%
Return on Net Worth*(%)	N/A	N/A	N/A

*This ratio is non-determinable due to negative average net worth for the year ended March 31, 2024 and March 31,2023 on account of losses of previous years. The net worth is positive Rs 19,964.32 as at March 31, 2024 compared to negative net worth of (62,465.16) as at March 31, 2023.

Financial performance

Income

Passenger ticket revenue

Passenger ticket revenue increased by 26.3% from Rs 481,743.71 million in FY 2023 to Rs 608,227.74 million in FY 2024.

Revenue from ancillary products and services Revenue from ancillary products and services primarily include cargo, excess baggage, special service requests, ticket modification and cancellation, in-flight sales, and tours. Revenue from ancillary products and services increased by 20.9% from Rs 54,415.21 million in FY 2023 to Rs 65,789.01 million in FY 2024.

Other income

Other income is primarily comprised of financial income on cash and other non-operating income. Other income increased by 62.2% from Rs 14,349.65 million in FY 2023 to Rs 23,268.21 million in FY 2024.

Revenue per Available Seat Kilometre (RASK)

RASK increased by 3.2% from Rs 4.80 in FY 2023 to Rs 4.96 in FY 2024, driven by increase in yields and passenger load.

Expenses

Total expenses increased by 12.5% from Rs 561,858.03 million in FY 2023 to Rs 631,818.54 million in FY 2024.

Aircraft fuel expenses

Aircraft fuel expenses increased by 1.1% from Rs 236,460.17 million in FY 2023 to Rs 239,045.78 million in FY 2024, against a 21.8% increase in capacity, primarily due to decrease in 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 24.0% from Rs 156,609.64 million in FY 2023 to Rs 194,270.14 million in FY 2024.

Employee benefits expense

Employee benefits expense increased by 34.8% from Rs 47,947.52 million in FY 2023 to Rs 64,618.56 million in FY 2024.

Foreign exchange gain/loss

Foreign exchange losses decreased from Rs 29,597.73 million in FY 2023 to Rs 7,173.97 million in FY 2024.

Other expenses

Other expenses increased by 30.2% from Rs 42,469.61 million in FY 2023 to Rs 55,299.07 million in FY 2024.

Cost per Available Seat Kilometre (CASK)

CASK decreased by 9.3% from Rs 4.83 in FY 2023 to Rs 4.38 in FY 2024, primarily driven by lower fuel cost and lower foreign exchange losses.

The Company reported a net profit of Rs 81,724.68 million in FY 2024 against a net loss of Rs 3,057.89 million in FY 2023.

Balance sheet

IndiGos total cash increased by 48.3% to Rs 347,375.29 million as of March 31, 2024, comprising of free cash of Rs 208,229.91 million and restricted cash of Rs 139,145.38 million. Total debt for the Company was Rs 512,800.20 million, including capitalised operating lease liability of Rs 434,886.36 million, as of March 31, 2024.

Managing risks effectively

IndiGo has a robust Risk Management Policy and an Enterprise Risk Management (ERM) framework in place, aligned with SEBI (LODR) guidelines and approved by our Risk Management Committee. Our dynamic and proactive Risk Management Policy identifies potential risks regularly, enabling us to take the necessary measures to effectively manage and mitigate them. This well-defined approach ensures that we can identify and manage risks that may impact our business, supporting sustainable longterm growth.

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

Operational issues with aircraft engines

IndiGo, like many global airlines, has been experiencing supply-chain issues impacting the availability of spare engines for its NEO P&W GTF-powered aircraft, which has impacted its operations. Failure to obtain timely deliveries of essential aircraft parts, such as spare engines, can impact its financials materially.

The Company has taken various measures such as lease extension of aircraft, getting additional aircraft on damp lease, and induction of used aircraft to reduce operational disruptions. The Company is also working closely with OEMs and engine manufacturers to ensure there is minimum economic and operational impact.

Competition in the airline industry

The airline industry is highly competitive. IndiGo faces competition from other carriers across the product spectrum operating on similar routes and similar markets.

The Company continues to focus 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 its assets.

The Companys codeshare partnerships with eight leading global airlines gives customers added flexibility and comfort to extend reach beyond its directly served destinations. Additionally, a digital transformation journey is underway in IndiGo, including the launch of a customer loyalty program, personalising digital experience for customers, adding AI-driven capabilities, and adopting world class digital platforms.

exceptional variation in fuel prices

Aircraft fuel expenses are the most significant expense of IndiGos total cost. Globally, the price of fuel fluctuates because of numerous economic and geo-political factors and events that govern them. IndiGos operating performance is negatively impacted by any adverse movement in fuel prices.

IndiGo maintains a young fleet with an average age of around 4 years as on March 31, 2024, resulting in lower fuel consumption. Around 78% of IndiGos fleet is NEOs as on March 31, 2024, which is ~15% more fuel efficient compared to the A320ceo. Additionally, higher seats in NEOs help in reducing fuel CASK.

Further, IndiGo focuses on improving fuel efficiency of its fleet to reduce operating costs. IndiGo also adopts various fuel-efficient practices such as single engine taxis and optimising flight path.

Adverse movement in foreign exchange

IndiGos costs include aircraft and engine lease rentals, aircraft and engine maintenance, and aircraft insurance are denominated in foreign currency. Adverse movement in foreign exchange may impact profitability.

The Company has been regularly monitoring the currency movement and its impact on profitability.

IndiGo is continuously growing international operations and global strategic partnerships, and this enables it to increase foreign currency revenue which offsets its foreign currency outflow as a natural hedge. The foreign exchange liabilities on the balance sheet are partially hedged from foreign currency deposits. Further, the Company has hedged a certain portion of its foreign exchange exposure using financial instruments in accordance with the approved policy.

Environmental, social, and governance risk

In the recent years there has been an increased focus on environmental issues, both in India and globally. In the context of the aviation sector, key areas of focus are greenhouse gas emissions, noise, and waste management. The regulators may require the aviation sector to offset its emissions, undertake noise abatement measures, and reduce solid waste. CORSIA, which is a carbon offsetting and reduction scheme for international aviation, will be applicable for Indian airlines from 2027. Actions to mitigate these environmental issues may require airlines to invest in modern generation aircraft, use blends of sustainable aviation fuel (SAF), and/or purchase carbon offset units. Some of these measures like SAF may be available at a significantly higher cost compared to the current cost for airline companies. As more institutional investors are considering ESG as a factor while making investment decisions, this may result in lower investment appetite in the aviation sector.

IndiGos DNA and operating culture has embraced these issues since start of its operations. We were amongst the first few airlines in the world to place an order for Airbus A320neo aircraft which are 15% more fuel-efficient and 50% quieter when compared to older generation aircraft. A relatively young fleet with an average age of around 4 years has further helped us in reducing our greenhouse gas emissions. Around 78% of our current aircraft fleet belongs to the Airbus A320neo family.

For ground operations, we are making investments in electric coaches and electric ground equipment. We are in active discussions with oil marketing companies regarding sustainable aviation fuel, supply of which is constrained both globally and locally. These initiatives have placed us in the category of one of the lowest carbon-emitting airlines in the world and at the same time one of the lowest noise producing airline. Our active drive against solid waste generation is helped by numerous initiatives, including avoidance of single use plastics in favour of biodegradable options for more than 100 items in FY 2024.

IndiGo is an equal opportunity employer, and approximately half of our workforce is female. Furthermore, IndiGo is proud of its record of being leaders globally in employing women pilots.

Our inclusive hiring efforts have resulted in doubling of People with Disability (PwD) number in the current financial year.

IndiGoReach, the CSR arm of IndiGo, works around four thematic areas covering children and education, women empowerment, environment, and heritage which aims to contribute towards the goal of sustainable development for communities. Our community development also includes reforestation and tree plantation in certain rural areas to aid contribution towards mitigation of climate change. With IndiGoReach, we have set an ambitious target of planting one million saplings across the country by the end of this decade.

Furthermore, we uphold the highest standards of governance, ensuring transparency, accountability, and ethical conduct in all our operations. Our Board of Directors is committed to overseeing the Companys performance with integrity and diligence, guided by a strong code of ethics and compliance framework.

Overall, IndiGos commitment towards sustainability extends beyond regulatory compliance, encompassing a comprehensive approach to environmental stewardship. By integrating sustainability into its business strategy, IndiGo not only contributes to a greener aviation industry but also reinforces its position as a responsible corporate citizen.

Inability to recruit and retain key talent

IndiGos business requires it to attract and retain top talent which is highly skilled and dedicated. Any shortfall in the availability or inability to hire, train, or retain qualified employees may have an adverse impact on operations and growth plan.

IndiGos HR team follows a process of effective succession planning for crucial leadership positions.

IndiGos recruitment process and training team work together to ensure sufficient lead time in hiring for crew roles, and for critical functions like Engineering and Flight operations. IndiGo has in place trainee programmes like the Cadet Pilot Programme that continue to provide it with skilled employees. IndiGos state-of-the-art learning academy, ifly, continues to administer these programmes and be at the forefront of training and provide aviation ready workforce. At ifly, IndiGo trains more than 2,000 employees daily, which is expected to increase to more than 3,500 employees in the near future.

Employee-related risks

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

IndiGo spearheads and promotes employee engagement initiatives that are effective in fostering talent development and employee connect. By utilising structured surveys such as Rs 6E Speaks, we foster a culture of feedback and coordinate actions based on insights gathered from the surveys. In addition to recognising and honouring the diligent staff, IndiGos rewards and recognition programmes serve to keep the employees motivated.

The health and safety of employees is our highest priority. IndiGo implements a range of initiatives to promote the physical and mental health of its workforce. It is essential to establish trust, encourage collaboration, and cultivate a positive work environment through effective communication. IndiGo utilises multiple channels to accomplish this, including employee helplines, townhalls, and more.

Additionally, the Company ensures consistent communication with its staff members and attends to their well-being. Timely reviews and monitoring, facilitates the early detection of any issue, allowing for a proactive implementation of a mitigation plan.

In the event of a disruption, a team of experts remain trained to handle it. Periodic evaluations are conducted to verify compliance with various labour laws. A consultation with legal counsel is also sought to remain informed about developments in labour laws and regulations.

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 has a mature safety management system based on an encouraging culture of safety reporting and risk management, supported by a robust safety assurance. Participation in the safety programme is from all levels of the organisation and across geographical locations where IndiGo operates.

The empowered and inspired safety culture is demonstrated through the various levels of safety meetings at operating airports to the highest level attended by the leadership team to discuss the safety concerns in the operations, monitoring of safety metrics, conduct elaborate program of safety audits, and inspections to measure the effectiveness of the standards and recommendations and benchmarking our performance with global airlines through IATA safety data exchange programme.

Airline security

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

IndiGo works closely with BCAS (Regulator), CISF,

NSG and Police, and also has codified numerous operating procedures to be prepared for any security contingencies. IndiGo has taken various steps to ensure security at all levels of the organisation. With a vigilance team at all major stations, background check of all employees, random screening of staff, and surprise check of AEPs (Airline Entry Permit), IndiGo has been able to avoid any major accident and prevent theft/fraud. It continues to conduct periodic background verification during AEP renewal process. IndiGo also has a dedicated trained team for Emergency Response, which is adept to deal with any emergency, in accordance with the laid-down procedures. A process of continuous improvement ensures that all new risks are assessed and countermeasures are appropriately inducted.

Breaches in IT/Cybersecurity

Airlines rely heavily on IT and complex network technology. These 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 normal business operations, potentially leading to loss of business, subject us to data breach and can result in a multi-pronged impact including regulatory actions, operational interruption, reputation loss, and intellectual property loss.

IndiGo Cybersecurity is aligned as per the industry standards such as the National Institute of Standards and Technology (NIST) and ISO/IEC 27001. IndiGo follows the Defense in Depth approach in cybersecurity and has implemented all required security controls for prevention, detection, and response. IndiGo is consistently striving to enhance and evolve its cybersecurity framework using advanced technology to effectively mitigate risks and safeguard digital assets.

Changes in the Government regulations

The civil aviation industry in India is regulated by the Ministry of Civil Aviation (MoCA), including the Bureau of Civil Aviation Security (BCAS), Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI), and Airports Economic Regulatory Authority of India (AERA).

The regulations are extensive, complex, and cover all major aspects of airline business and operations, including training, licences, aircraft acquisitions, routing and passenger facilitation. Any changes in such regulations, or the imposition of additional restrictions and conditions, can affect business and operations.

IndiGo keeps itself abreast of all regulatory changes, as amended from time to time and ensures timely compliance. IndiGo maintains close communication with the regulatory authorities and airports to provide its customers with safe, seamless, timely, and affordable domestic and international air travel. IndiGo is a member of the Federation of Indian Airlines (FIA) which works as an industry forum for voicing and submitting concerns/response of its airline members in policy and regulatory matters relating to the Aviation industry.

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 response mechanism which clearly outlines the flow of communication and protocols for any such events. IndiGo also has a dedicated emergency response team, and processes and procedures in place to immediately handle any such crisis situations.

Human resources

As a purposeful organisation, IndiGo truly believes in the value of having motivated people to deliver excellence. Through every phase of an employees life cycle, IndiGo makes strategic interventions to ensure that IndiGo is able to take their experience a notch higher every year. The first initiative toward this was the launch of its HRMS tool which streamlined all its core HR functions like recruitment, payroll, recognition, and leave and attendance into one system, for maximum efficiency.

The process starts at recruitment where IndiGo seeks to attract diverse and highly motivated aspirants through a structured process. The recruitment team evaluates the knowledge, skills, and abilities of the candidates and conducts aptitude, language, and psychometric tests. To equip hiring managers with necessary skills, ensuring a fair and unbiased hiring process, IndiGo introduced Hire Right

- a training module focused on aligning managers with IndiGos core values, which helps in creating long-lasting and sustainable career opportunities within IndiGo. The induction process for new joiners was strengthened by bringing in digitisation wherever possible and improving the orientation session by involving our learning academy, ifly.

The IndiGo Way

To instill a shared ethos across the organisation and our commitment to values, IndiGos Values and Purpose have been consistently reinforced in every training session. Furthermore, to ensure that employees can personally connect with IndiGos values, IndiGo integrates these values and their associated behaviors into goal-setting processes. Employees assess their alignment with these values themselves, while managers also evaluate team members based on adherence to these principles.

6E Breez

IndiGo is committed to improving employee experience by offering employee on the click of a button via 6E Breez - our employee super app. 6E Breez provides access to personal records, leave and attendances, people policies, Mediclaim, 6E Care, Made in IndiGo - Internal Job Posting (IJP), 6E Flix (video library), 6E Speaks survey, deals on merchandise or gift cards, and dining-out offers.

Take off 2.0

IndiGo launched Take off 2.0, an initiative committed to eliminating biases that women encounter when restarting their careers after a break. The programme is designed with a holistic approach where not only the selected candidates are provided with a detailed structured induction and on the job learning programme with flexible work timings, but also the hiring managers are sensitised how to mentor the returning women to work and act as a support system. In a period of nine months, 26 women restarted their professional journey under this initiative.

Other initiatives

Honouring International Womens Day, IndiGo launched a dedicated internal community called 6E Girl Power for all women employees. This was accompanied with a week-long celebration which included specially-designed digital frame, Zumba for women, special tie-ups, and offers.

6E Girl Power is aimed at fostering a sense of belonging, enhancing skills, and promoting wellness through theme- based clubs like Innovative Corner, Readers Club, Power of Investing, and more. Sessions on Empowering your Career Journey, Financial Literacy, and Understanding Self have been conducted.

Diversity, Equity, and Inclusion

IndiGo continues to promote diversity, equity, and inclusion in the workplace. For this, IndiGo curated training programmes and awareness campaigns to sensitise employees, help them understand the qualities of inclusive leaders, recognise and overcome biases that are common in critical processes like hiring, and career progression. IndiGo also demonstrates and educates employees in the appropriate way to deal with people from varied backgrounds.

IndiGo has 380 women in People Management roles and 713 women pilots as of March 31, 2024. IndiGo takes pride in being an inclusive organisation and encourages employees to embrace their identity. IndiGo organised a pride parade in June 2023 - the pride month-to set out a message, unambiguously, that IndiGo stands for all as one. IndiGos inclusive environment has fostered a sense of safety, with over 30 employees from the LGBTQIA community feeling empowered to come out and embrace their identity. IndiGo surpassed its target of onboarding 100 differently- abled employees and successfully onboarded over 200 individuals by the end of FY 2024, more than doubling its initial goal. With this at March 31, 2024 IndiGo has a total of 201 PwD individuals.

Learning and development

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.

It continues to execute learning through digital platforms, classroom sessions and practical orientation at the airports. IndiGos learning academy, ifly, is entrusted with creating the IndiGo spirit, enriching IndiGo culture and training employees on business priorities and future leadership behaviour. For instance, DigiStar 2.0, a comprehensive one- year learning framework for Digital department employees, enhances self-awareness, interpersonal skills, executive presence, leadership, and digital mindset. Key features include mentoring, a Digital Dashboard for credit tracking, and experiential activities like airport visits to understand operations and connect with Senior Leaders. Another example is IndiGos Applied Analytics Program (IAAP) - an 8-month initiative cultivating analytics experts for aviation- combining classroom training (4 months), focusing on technical and soft skills, with application-based training (4 months) using real aviation data. Beyond this, ifly continues to develop hundreds of cabin crew via new employee training, as well as refreshers on an ongoing basis, IndiGo has several programmes aimed at developing pilots from within the organisation and from its employees families.

Rs 6E Family Fly is a programme aimed at supporting members of its employees families to be pilots, and Rs 6E Fly High is aimed at supporting its own employees desirous of becoming pilots. With its steady induction of graduating Cadet Pilots and continuous programme of internal promotions to Captain positions, IndiGo believes that it has a robust practice of developing pilot talent, something that is key to the Companys future.

Employee well-being

IndiGo launched IndiGood Life, IndiGos health and wellness programme catering to the overall well-being of the employees, be it financial, mental or physical.

Under this initiative each department took on its own wellness challenges focused on mental health, physical wellbeing, and financial literacy. Diverse sessions varying from meditation to, Zumba, yoga, financial planning, heart care, and lung care, were organised on a regular basis.

Further, to cater to specific and unique wellness goals of an individual employee, IndiGo onboarded a diet and wellness coach to guide them on aspects like weight management, diet, and nutrition planning.

Feedback

6 Speaks

With the changing environment, IndiGo draws inputs and feedback from 6E Speaks,- the employee engagement survey, on an annual and quarterly basis, and devises action plans based on these inputs.

6 Voice

A platform for employees to share recommendations, give ideas, or raise concerns was revamped and launched with a more user-friendly interface. The recommendations and ideas are shared with relevant business leaders for evaluation and implementation. Concerns raised are addressed by respective committees.

IndiGos 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 four years in a row. This further strengthens IndiGos position as one of the best workplaces in India, offering a safe and inclusive work environment.

As of March 31, 2024, our dynamic workforce comprised 36,860 employees, including 5,038 pilots and 9,363 cabin crew.

Capital allocation and liquidity management

IndiGo prioritises prudent capital allocation to areas that enhance its operational capabilities, improve customer experience, and drive long-term value. This includes investments in modernising its fleet, expanding its route network, and investing in technology and infrastructure to support its growth ambitions. At the same time, IndiGo believes that equally important is the effective management of liquidity. Maintaining a strong liquidity position is essential for navigating the cyclical nature of the airline industry and mitigating the impact of external shocks. IndiGo adheres to a disciplined approach to liquidity management, ensuring that it has adequate resources to meet its financial obligations, invest in growth opportunities, and maintain adequate safety valve.

Internal control systems and their adequacy

IndiGo has put in place adequate internal control systems commensurate with its size of operations. IndiGos 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 maintains a system of internal controls designed to provide reasonable assurance regarding the following:

Further, an independent internal audit (employing a globally acclaimed auditor) 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.

IndiGo takes a digital flight

Last year, IndiGo signed off on the robust lift-off of its digital initiatives. IndiGo has continued to build on that momentum with a focus on execution and transformation. IndiGos digital journey till date encompasses delivery of various projects, all driven by a common goal to enhance customer experience through the digitisation of our end-to-end business processes, enabled by state-of-the-art technology and architecture.

A key milestone this year was in-house innovation studio,

Lab 37, launching 6Cskai, an AI conversational direct channel, that has changed the way we interact with our customers.

In addition to providing quick and personalised responses, users can book flight tickets while on the chat, allowing effective and efficient customer engagement. Additionally, Sky+ has been instrumental in improving our web and app experience, while the centralised customer platform by Salesforce helps manage and address all customer- related concerns.

To build a solid, future ready, digital foundation, IndiGo undertook a comprehensive version upgrade of our Passenger Services System (PSS), which sits at the heart of IndiGos commercial and business operations. Over 200 product enhancements have been delivered in the new version. IndiGo digitised core airline processes with the introduction of the Baggage Reconciliation System, an app for crew logistics, Ground Support equipment (GSE) automation, implementation of INFORM - a manpower planning tool, and self-baggage drop systems at the airports.

Through its digitisation efforts IndiGo aims to continuously innovate, transform, and adopt newer systems to provide a seamless, efficient, and sustainable travel experience for our customers. IndiGo has commenced setting up a Modern Data Platform Enterprise Data Hub) to help leverage and federate information for diverse Business Units data and analytics needs.

Cautionary statement

Certain statements in the Management Discussion and Analysis section concerning prospects may be forwardlooking 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, a 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 forwardlooking 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.