IndiGo Goes Upscale: What Its New Business Class Reveals About India’s Premium Shift 

Skift Take

IndiGo got big as a budget airline. But Indians are increasingly willing to spend on luxury and the airline is going where the money is.

Peden Doma Bhutia

IndiGo, India’s largest airline, will be introducing a business class on the high-demand Delhi-Mumbai route. This is a strategic move by the airline to meet the growing demand for luxury and premium travel.

This new top-tier cabin, set to debut in mid-November, marks a significant shift for the airline, traditionally known for its budget offerings.

Euromonitor International also projects India’s luxury market to reach INR 822 billion ($9.8 billion) by 2027, up from INR 536 billion ($6.4 billion) in 2022. Rising disposable income and a growing middle class eager to enjoy high-end experiences, including premium air travel, are the main drivers of this market expansion.

“IndiGo is embarking on a new path of its incredible growth story by introducing a tailor-made business product on the nation’s busiest routes,” said Pieter Elbers, CEO of IndiGo.

Well-Timed Launch

The timing of this launch could not be better. “Rising disposable income and aspirations among flyers in our country have created a critical mass of travelers willing to pay a premium for priority services, comfortable reclining seats, and gourmet meals,” according to Aloke Bajpai, chairman and group CEO of ixigo. Bajpai also noted this trend in Tier-2 and Tier-3 cities, where consumers are increasingly opting for higher-value products and services.

IndiGo’s decision also aligns with broader trends in India’s travel and tourism sector. A report by the World Travel & Tourism Council (WTTC) predicts that India will become the world’s fastest-growing major economy in travel and tourism, with an annual growth rate of 7.5% between 2021 and 2031. According to the report, luxury travel will be a key contributor to this growth.

Indiver Rastogi, president and group head, Global Business Travel, Thomas Cook (India), and SOTC Travel, noted the under-supply in India’s domestic skies for premium front cabin services like business class.

Rise in Premium Travel Among Corporates

“Most corporates structure their policies primarily on economy, they focus on premium economy/business for senior management. Our expectation is that this will open up with stabilization in premium cabin pricing,” Rastogi said.

“IndiGo’s business class launch could not have been better timed as it leverages this change of focus to comfort and convenience,” according to Rastogi. He added that IndiGo’s Blue Chip frequent flier program is likely to further fuel demand and create loyalty among business travelers.

The rise in premium travel demand is also clearly evident in the corporate sector. Sunny Sodhi, managing director of FCM Travel India, further noted, “Corporate travel continues to be a critical facet for businesses as they look to survive, thrive, and grow at home and abroad. There’s no question businesses see travel as a non-discretionary spend.” As India is set to become the seventh-largest business travel market in the world, IndiGo is responding to this growing demand by introducing a business class.

A Fundamental Shift, Not Just a Passing Trend

Talking about the significant shift in the preferences of Indian consumers toward premium offerings, Manju Sharma, managing director of Jaypee Hotels & Resorts, said: “We believe this preference for premium offerings is not just a passing trend but a fundamental shift in the Indian market.”

Rising disposable income in India is also driving a shift towards immersive and luxury travel, said Rikant Pittie, co-founder of EaseMyTrip. “As the premium segment expands, more players are offering unique luxury experiences at affordable prices, thanks to innovative business models and increased competition,” he noted.

Pittie further expects affordable luxury travel services to grow in India, offering a broader range of high-end experiences for travelers seeking luxury without the hefty price tag.