IndiGo May Trade Its Turboprops for Jets
IndiGo is the name most Indians know for cheap flights. It is also the country's largest airline, and right now it appears to be shopping for a new kind of plane.
The goal would be to replace IndiGo's ATR turboprops and add more seats on regional routes.
These are the smaller jets, built for short hops between nearby cities. They are not the wide-body planes that cross oceans.
Think of them as the middle ground between a turboprop and a big jet, built for short, busy routes.
As of March, IndiGo's fleet stood at 441 planes, and 46 of those were ATR turboprops.
The airline still has around 900 planes scheduled for delivery over the next decade, which makes a regional order a small slice of a much bigger plan. Still, it would be a notable shift, because IndiGo has historically bought mostly Airbus jets.
A Deal Could Push Embraer Closer to an Indian Assembly Line
A purchase of this size does not just help an airline. It could reshape what Embraer can do in India.
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It would put the company closer to a goal it has talked about for a while: building planes right there in the country.
Airline deals of this kind are almost always negotiated, and the final price tends to land below the sticker price. Even so, billions is billions, and a deal like this would be a milestone for Embraer.
Embraer's CEO, Francisco Gomes Neto, has said, "The company would need at least 200 orders for its E175 regional jet before it would seriously consider an Indian assembly plant." This potential IndiGo order would not get there on its own, but dozens of jets would be a meaningful step.
Embraer has already taken smaller steps in that direction. It agreed with Gautam Adani's group to manufacture planes in India, which supports Prime Minister Narendra Modi's goal of turning the country into an international manufacturing hub.
The company also opened a New Delhi office last October.
India currently has no commercial plane assembly at all. Its airlines depend on foreign producers, and carriers like IndiGo and Air India have some of the biggest outstanding order books for Airbus and Boeing jets.
An Embraer plant would be a first. The company is also talking with Star Air, India's biggest regional airline, about selling up to 20 planes in a deal worth about $1 billion, according to Bloomberg News.
What This Means for Investors
Those who provided the details spoke on condition of anonymity because the matter is private.
Neither IndiGo nor Embraer responded right away when asked for comment.
India is already the third-largest air-travel market in the world, according to IATA, and it is growing quickly. That growth is why airlines keep placing enormous orders, and it is why Embraer wants a bigger piece of the action.
For travelers in India, the practical effect could be more flights to smaller cities. That is what regional jets are for, and it is exactly what IndiGo would be buying them to do.
IndiGo's existing order book is built around Airbus narrow-body jets, and a regional deal would be an addition to that plan rather than a replacement for it. The carrier's ATRs currently handle many short routes, so moving some of that flying to E2s would increase capacity without shifting to larger planes.
For investors, the question is not whether IndiGo signs this deal. It is whether the momentum behind Indian aviation is real enough to keep producing orders like this one.
Airlines only buy planes when they expect people to fly, and plane makers only build factories when they expect orders to keep coming. When the largest airline in one of the world's fastest-growing travel markets starts shopping for a new kind of plane, that signal tends to reach portfolios long before the new planes reach the sky.
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