Mumbai: IndiGo , India’s largest domestic airline by passengers carried, confirmed an order to buy as many as 250 Airbus A320neo single-aisle jets. At the listed price, the order is worth $26.5 billion.

InterGlobe Aviation Ltd, the owner of IndiGo, had signed a memorandum of understanding last year to buy 250 planes made by Airbus. IndiGo, which plans to raise around ₹ 2,500 crore in an initial public offering, had said in its draft share sale documents that the accord signed between Airbus and IndiGo had expired. The firm added that the airline is in discussions with Airbus to renew the same.

IndiGo has been consistently profitable since 2009, a feat unrivalled by any other domestic airline.

According to IndiGo president Aditya Ghosh, the new order further reaffirms the airline’s commitment to the long-term development of affordable air transportation in India and overseas.

“The additional fuel-efficient A320neo aircraft will enable us to continue to bring our low fares and courteous, hassle-free services to more customers and markets and will create more job opportunities and growth," Ghosh said in a phone interview.

In 2005, IndiGo placed an order for 100 A320s, all of which have been delivered. With Monday’s announcement, IndiGo has ordered 530 aircraft from the A320 family with Airbus. Out of this 530, IndiGo has taken delivery of 100 planes.

The A320neo plane’s “new engine option" incorporates many innovations, including the latest generation engines and large sharklet wing-tip devices, which will deliver 15% in fuel savings from day one and 20% by 2020. This is equivalent to a reduction of 5,000 tonnes of CO2 per aircraft per year.

Ghosh said IndiGo will start taking delivery of the newly ordered jets from 2018 to 2026.

“We are nine years old and we are now outlining growth for the next 11 years. We have successfully financed 100 planes in the past. So I don’t see any problem in financing the remaining. Also, we have time to arrange funds," Ghosh said.

IndiGo had a 33.8% share of domestic passenger volume for fiscal 2015. As of 30 April, the airline offers 593 daily flights connecting 33 airports in India.

Craig Jenks, president of New York-based Airline/Aircraft Projects Inc., termed IndiGo’s order as a bit less overwhelming than it first appeared. “It is spread over eight years, so theoretically 31 per year. Airlines rarely order for delivery over such a long time period.

“By 2026, it will have returned the 90 or so A320s still in the fleet, and some or even all of the initial batch of 180 A320neo’s being delivered in the next few years, starting next year," he said.

Jenks said this is due to its policy of keeping average fleet age very young.

“Booming demand for air travel in India is not in doubt. The problem for IndiGo and others could be government policy of being reactive rather than proactive on airport capacity, with new capacity consequently consistently lagging demand and lagging capacity growth in other countries by many years," he added.

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