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Good evening, ladies and gentlemen, and welcome to IndiGo's Conference Call to discuss the Third Quarter of Fiscal year 2023 financial results. My name is Aman, and I'll be your coordinator. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the call over to your moderator, Ms. Richa Chhabra from the Investor Relations team of IndiGo. Thank you, and over to you, ma'am.
Good evening, everyone, and thank you for joining us for the third quarter fiscal year 2023 earnings call. We have with us our Chief Executive Officer, Petrus Elbers; our Chief Financial Officer, Gaurav Negi; and our Chief Programs Officer and Head of Investor Relations, Kiran Kumar Koteshwar with us to discuss the financial performance and are available for the Q&A session. Please note that today's discussion may contain certain statements on our business or financials, which may be construed as forward looking. Our actual results may be materially different from these forward-looking statements. The information provided on this call is as of today's date, and we undertake no obligation to update the information subsequently. We will upload the transcript of prepared remarks by day end. The transcript of the Q&A session will be uploaded subsequently. With this, let me hand over the call to Petrus Elbers.
Thank you, Richa. Good evening, ladies and gentlemen, and thank you very much for joining the call. We announced today our third quarter of the fiscal year 2023. It was a very strong quarter on the demand side, and IndiGo performed very well with improvements in operational, financial and customer experience parameters. In November 2022, we were back to being the most punctual airline in the country, and we retained the #1 spot also in December of last year. As India's preferred airline, we welcomed a record number of 22.3 million customers during the December quarter. I'm very glad to report that we had the highest ever quarterly revenue of INR 154.1 billion, and a robust quarterly profit of INR 14.1 billion for the third quarter of fiscal year 2023. After various quarters, we are now back at meaningful levels of profitability as our profit margin speaks at 9.5%. With that, I would like to sincerely congratulate all IndiGo employees for their superior performance and our customers for choosing IndiGo. As guided previously, the capacity development in December was INR 28.8 billion ASKs, which is 4% higher than the quarter ending of September '22 and around 25% higher than the quarter ending in December '21. The yields came in very strong at INR 5.38 and the load factor also improved from around 80% in the December quarter to 85% -- sorry, 80% in the September quarter to around 85% in the December quarter.
On the cost front, our CASK decreased by 7% (sic) [ 6% ] sequentially, primarily due to a reduction in the adverse impact of 2 important factors: the fuel and the ForEx. Gaurav will cover the cost trends in detail in his section. In the December quarter, we added 22 passenger aircraft, net of deliveries to reach the 300 aircraft mark, the first for any airline in the country, giving wings to the nation and our ambition. It's indeed a great milestone in our journey, and we will continue to take further deliveries from our large order book of 500 aircraft.
Apart from this, we also added 1 more freighter to help us to add to our cargo revenue. These additions will help us to expand our footprint, both domestically and internationally. On the domestic front, in line with our focus to increase accessibility in the northeast part of the country, we added Itanagar as our [ 10th ] destination in the Northeast region.
With Itanagar added, we now connect to all 7 sister states of Northeast India. In January, we opened operations to the new Goa International Airport in Mopa as our 76th domestic destination. This was our largest new station lounge ever and connects North Goa to 8 cities across India to 168 weekly frequencies. This opening is the largest by any airline to any destination in India and momentum for us as it signals towards our ambition and endeavor to provide connectivity, ease of accessibility and provide even more options for our customers to one of the most visited tourist destinations of the country. Gradually, we'll also further explore international destinations from this airport. While domestically, we serve a very significant share of our passengers. Internationally, we served around 16% passengers in and out of India, leaving us with an enormous opportunity for further growth. In terms of mix and recovery, around 23% of our capacity measured in ASKs in the third quarter was deployed in international markets, and we're already operating at 105% of our pre-COVID levels. With demand for international travel continuing to grow, we aim at expanding international connectivity further in the year 2023. One of the other developments is the addition of capacity between India and Europe through our codeshare agreement, which allows our customer to travel to 27 destinations like Amsterdam, Manchester, Milan and Athens. We will continue to explore strategic partnership in the future that will allow added connectivity for our customers and provide us with more global visibility. Last 1 year has seen a continuous recovery, and we have reached greater heights and navigated across many new frontiers. A wide range of initiatives and actions, which were set in motion over the past months, have started to yield results. The demand remained strong, enabled us to welcome a total of 76.8 million customers in the calendar year of 2022 and to reach a total of 1,700 plus daily flights in the month of January. We are thankful for our customers for flying with us and thankful to our employees for the reliability of service delivered at such a large scale of operation. Moving to the fourth quarter. The forward bookings look encouraging combined with relatively stable fuel prices, we hope to continue with this positive trend. We're looking forward to the next fiscal year with great enthusiasm building on our ambitious expansion towards our endeavor to Connect fast [indiscernible] India and add to the overall social economic progress of the nation. Let me now hand over the call to Gaurav to discuss the financial performance further in detail.
Thank you, Petrus, and good evening, everyone. For the December 2022 quarter, we reported a strong quarterly net profit of INR 14.2 billion compared to a net loss of INR 15.8 billion for the quarter ended September 2022 and a net profit of INR 1.3 billion for the quarter ended December 2021. The year-to-date December 2022 operational profitability, which is excluding foreign exchange loss, stands at around INR 20 billion as against a loss of INR 41 billion for the year-to-date December 2021, which is indicative of a steady recovery from the pandemic. We reported an EBITDAR of INR 34 billion, with an EBITDAR margin of around 23% compared to an EBITDAR of INR 2.3 billion and EBITDAR margin of around 2% for the quarter ended September 2022. This improvement in EBITDAR was driven by a sizable increase in revenue and a reduction in adverse impact of fuel and foreign exchange. This is suggestive of a relatively stable operating environment versus a couple of quarters ago. We saw a strong performance across several indicators in this seasonally strong quarter, with revenues improving by 20% compared to September quarter and 63% compared to quarter ended December 2021. The unit revenues came in at INR 5.26, which is 15% higher sequentially and 29% higher on a year-on-year basis. The fuel CASK reduced by 11%, primarily due to reduction in average fuel prices by close to 7% as compared to September quarter. The average fuel prices are still higher by about 50% as compared to December 2021 quarter. Looking at the nonfuel cost there are sequential reductions in CASK ex fuel by 4.3%, driven by lower foreign exchange loss. The rupee at closing date further depreciated by 1.4%, leading to a ForEx loss of INR 5.9 billion. Our CASK ex fuel, ex ForEx for December quarter stood at INR 2.55, an increase of 4.3% as compared to the September quarter. This increase was primarily due to restatement of salaries, additional expenses on certain digital initiatives and impact of global supply chain disruptions, which we are working to mitigate through alternate sources of capacity, including lease extensions and wet leasing. Our endeavor is to deploy adequate capacity during this strong period of recovery to minimize the average -- the adverse economic impact of such disruptions. Liquidity remained strong during the period, and we ended the December quarter with a free cash of INR 106.1 billion, a net increase of INR 23.6 billion as compared to the September quarter ended. Our total cash on December 31, 2022, was INR 219.2 billion, a net increase of INR 22.6 billion. We ended this quarter with a capitalized operating lease liability of INR 410.4 billion and a total debt, including capitalized operating lease liability, of INR 444.8 billion. The increase of around INR 35 billion is driven by additions in aircraft, certain lease extensions and quarter end foreign exchange changes that I spoke earlier. Our right to use assets at the quarter end was INR 254.8 billion. Moving on to the fourth quarter, we expect to operate at around 45% higher capacity as compared to the same quarter last year. We have demonstrated a high level of agility with positive market developments. We will be concluding fiscal year '23 at a higher side of the range of the previously guided capacity estimates. The bookings are strong for the fourth quarter with the effects of seasonality in yields. With this trend, we are expected to close fiscal year 2023 operationally profitable, excluding the impact of foreign exchange. We are currently building on our plan for the next fiscal year and finalizing our capacity. With the knowledge of today, we expect that capacity to grow around north of mid-teens in fiscal year 2024 as compared to fiscal year 2023. We will be giving more color on these aspects in the next earnings call. Our long-term prospects remain solid as we look forward to the next 5 to 10 years of IndiGo's growth. We continue to remain focused on providing high-quality products to our customers, increasing our productivity levels and remain committed to generate healthy returns on capital. With this, let me hand it back to Richa.
Thank you, Petrus and Gaurav. [Operator Instructions] And with that, we are ready for the Q&A.
[Operator Instructions] The first question is from the line of Binay Singh from Morgan Stanley.
Congratulations the team, a phenomenal set of earnings. My question is on capacity. Earlier, as you said -- disclosed around [ rebounding ] capacity during the conference call, I [ assume ] you also alluded to extend the leases. So is it -- could you...
Your voice is not very clear. Sorry to interrupt you. Can you please use the handset.
Yes. I hope this is now better. So my question on that capacity...
Your voice is still breaking, sir. May I request you to come in network area, please. Binay would like to join back in the queue. In the meanwhile, we'll move to our next question. We will take the next question that is from the line of Deepika Mundra from JPMorgan.
Congratulations for the great quarter. A couple of questions for me. So your guidance of 15% odd capacity growth next year. Could you put that into context of the grounded aircraft situation and availability of spare engines as well as in terms of what the situation like in terms of getting new deliveries from Airbus in light of their recent miss on deliveries?
Yes. I think we have demonstrated, let me take a bit of time to answer your question and look back first to what we have been doing this year. At the start of this year, we've indicated the capacity guidance, I believe, between 13% and 17%. And despite the challenging situation on the supply chain with a range of mitigation actions, we've been able to maintain the high end of that capacity guidance. As Gaurav just alluded, for next year, we have a capacity guidance somewhere around the north of the mid-teens. So that's our guidance for next year. We still have flexibility in adjusting that going forward depending on demand situation and depending on the AOG situation. So we do expect the deliveries of Airbus to resume in the next year. We are working to get the alternatives on capacity as we have been doing for the past quarter. And with that, we are confident that the capacity guidance, which we were just giving north of the mid-teens for the full year, can be achieved.
Understood. And if you could give us as to what percentage of the aircraft is currently grounded, if at all?
Well, we're not going into a specific number. There's also some fluctuations on that. But the number, I must say, compared to the last earnings call, we had is pretty stable, and we work closely with the suppliers to increase the supply chain. And as I said, we have various actions. One of them is extending some of the leases. And you may have seen in the news, we have also yesterday or the day before yesterday started a wet lease operation to Istanbul in order to provide us that wet capacity.
Last question for me. Is there any -- in the results, any impact of holding cost of these grounded aircraft? And is it adequately being compensated by the OEMs?
Yes, there is. So because of the AOGs, there's an impact. We are working with the OEMs to get some relief related to that. Some of it did come through in the quarter results, which kind of offset that -- So we continue to keep working with the OEMs to -- for the remainder of the AOGs that we have to get adequately compensated.
The next question is from the line of Joseph George from IIFL.
Pardon me for the background noise, I'm on the road. I have got more questions. One is simple math, which is your revenues for the quarter minus the passenger ticket revenue, minus the [indiscernible] revenues I get a component which might be some other revenues, which in the past couple of quarters has been about INR 1 billion, about INR 100 crores. And this quarter, it's jumped to about INR 350 crores, which is INR 3.5 billion. So if you can help us understand why there's a big jump of about INR 2.5 billion this quarter? That is one question. The second question is in relation to the aircraft utilization. When I look at it in terms of number of hours per day, [indiscernible] 12.5 to 13 hours per day pre-COVID. And now I understand just in that take to 11 hours per day. So what is the outlook on that number? And can we get back to the 12.5 to 13 hours-a day number?
If you look at the other category, obviously, it has multiple elements to it. Some of it is related to other revenue streams like values and funding that we have related to the RCF portfolio and the flights that we take. Aside from that, we do get some OEM-related credits that we spoke about, which are -- some of it is related to the AOGs and some are related to the delays which we received in the quarter.
Again, these are relatively small given the grand numbers of revenues overall that you see, which is closer to of INR 15 billion. So that's what this makes up. Related to the utilization that we have, excluding the groundings, our utilization levels have been closer to the 13 hours that we have targeted, and we are quite comfortable with those 13 hours. And I think the team has done a fabulous job of reaching to those levels to mitigate some of AOG impacts that we have experienced in the quarter.
[indiscernible] started entirely pertained into the loss of flying hours this quarter? Or is there any element of past quarters as well?
It's a combination of both, I would say, and we're not getting specifically into details related to that. We continue to work with the OEMs, as I said, in the beginning, to adequately get compensated, but that's where we can probably [ leave ] the response at.
The next question is from the line of Mitul Shah from Reliance Securities.
Congratulations for a very strong performance. Sir, first question, I would like to understand this consumer behavior after sharp increase in back-to-back airfare, particularly from the Tier 2 and Tier 3 cities. And how has been the traffic in past 1 or 2 quarters? And what is outlook here?
If you look to the network of IndiGo, today, we operate to 76 domestic destinations. And actually, as recent yesterday, we announced 2 new destinations to be added in the month of March. Nashik and Dharamshala will be added to our network. So a very significant part of our network is the non-metros. So we have, of course, a very strong position at the metros. But given the size of our network, naturally a significant share of our ASKs is also operated in the Tier 2 and Tier 3 cities. If you run a network at 85% load factor for the entire quarter, with very strong days but also low -- less strong days, it means that basically also the Tier 2 and the Tier 3 cities are doing very well. And actually, we see that providing air connectivity to these cities is creating really a positive economic effect and sort of add-on effect where there's more economic activity. With more economic activity, there's more flying. And so it would sort of self-supporting system in order to create that air connectivity to Tier 2 and Tier 3 cities.
And second question, again, on this ATF prices being still volatile. Any thought on a short- to medium-term hedging or anything we are doing on this side? And what is the situation in this January and February beginning compared to last quarter's average in terms of pricing?
So we are not looking at ATF hedging to begin with. Obviously, the change -- the big shift that happened, happened last quarter, where we had the oil marketing companies shift to the MOPAG pricing, that gave us some favorability in terms of transparency as well as the price plan that was agreed on the tracking cost also gave some favorability to all the airlines. So that's been a positive development for us. The new regime that has been now put in place, we saw some reduction related to ATF with the prices coming down from MOPAG, which translated into relative savings for the airlines in quarter 3. We are seeing a similar trend. It's obviously going to be linked to the way the Brent is going to behave, which is then going to translate into the MOPAG index getting influenced. So other than that, we continue to push our operations to optimize fuel saving opportunities, which they've been doing traditionally also, and we continue to push that. But related to hedging, we are not looking at ATF as to be hedged in any time soon.
Sir, lastly, on this international capacity, as we are indicating mid-tilt plus growth for FY '24. I believe sizable terms would be for these new destinations on international side. Can you give a broader indication on how much it would be, please?
We are now fine-tuning our precise network plans going forward. As I said, we have a total growth plan for next year in the north of the mid-teens. The recent international expansions, which we have done, basically are performing very well. So we're optimistic in going forward. We have identified a list of destinations such as Nairobi and Jakarta, which are on the list to be opened somewhere in the year to come. We have recently seen opening of China as a market. So we are optimistic going forward. And beside our own expansion, part of the expansion we have done now as European co-shares which I mentioned in my introduction, are also helping us a lot to get a larger international footprint. And that goes basically hand in hand, if I may add there, that goes hand-in-hand with the -- also the development of the Indian economy with a much more international connectivity investments and positioning. So that's -- I think it nicely coincides. And it's not by coincidence, but by design that we are developing that international expansion.
The next question is from the line of Achal Kumar from HSBC.
And a wonderful set of numbers. So a couple of things actually. So first, I think you just said that you're still serving out the international network. But I mean in terms of strategies, are you going to operate the wide bodies? Are you go to operate narrow bodies? And if you want to operate the wide bodies, are you offering enough class, 2 classes to 3-class [ wings? ] So what will be the strategy on the international side? And as of now, you've just announced Istanbul operating these 777s. So is there -- I mean, what's the plan? I mean, is there a sort of a special kind of agreement with Turkish that you'll be operating 777s to Istanbul? Or is it like you're going to use 777s for the broader international networks? That is my first question. Secondly, also I wanted to understand about the competitive landscape now, of course, being more clarity on how the Tata is going to change its structure. So it looks like it will affect 2 airlines, 1 is an [indiscernible] AirAsia and Air India Express and then is 1 from service. What kind of risks do you see from that? And finally, about your liquidity, so you have very strong liquidity at the moment. Do you have any specific plans on how you use that money? And do you have anything in mind?
Thank you. I'll answer your first 2 questions, and then I'll ask Gaurav to go into further details on the liquidity. Let me start with the first one on the strategy, and I shared that with you last time. The strategy for IndiGo, in fact, has 3 main components. The first one is coming back to what I call the very basics of the success of our company, which is -- you see it back, for example, in the on-time performance. So the very 3 customer promises we're having, hassle-free and purchase service, on-time performance and affordable fares will remain very much so the basic and the core of our strategy. That's one. And I think, again, you see it back in the on-time performance where I'm very proud of what the teams did, really wonderful. We are back to the #1 position in India with the size of our operation, which is just a very impressive result by the teams. The second one is that -- the second part of that strategy is that we develop and align our structure in line with the size of our company. So we start to invest there in further digital tools and further internal processes and make sure that we can continue that growth bar. The third pillar is to create the future and basically work towards the next phase. Part of that next phase is indeed a more international exposure, and we started to do that with today's 26 destinations, but also to continue to work on our customer loyalty and elements linked to what we are. Your specific question on the wide-bodied, maybe it's good to remind that this was a -- one of the measures, which was taken in order to deal with the supply chain issues. So we are having a long-standing partnership and relationship with Turkish. It's one of the first, if not the first, airline partners of IndiGo. We operated to Istanbul already. We already had to be on codeshare, and we found a good way to deal with our supply chain issues in -- temporary [ leasing ] these wide-bodies from Turkish. That's today's situation. So in summary, the basis of the company is still very strong and the very foundations of what we did for the past 16 years. We continue to do that. And on that, we start to build our international footprint and our international exposure. And I think the results today, be it on the revenue side, be it on the financial performance side, just speak to the actions we have taken over the past period in order to relaunch that, that very strong foundations of the company. So there's no change in that strategy. And again, we're adding the widebodies to deal with the supply chain. Partnerships, last but not least, are an important part of that strategy. The fact that we have to be beyond codeshares now allow our customers to connect to Istanbul and as the last piece of their journey in Europe. So the longest part of their journey is with us. And then the last bit of their journey is with our partner Turkish Airlines. And as such, it provides us a footprint in Europe, it provides us awareness in Europe, and it also gives us an opportunity to get more non-Indian customers to India. So that basically is the very core of our strategy going forward. I'll ask Gaurav to do the liquidity question.
Again, on the liquidity side, after a long kind of a time, we've got close to INR 22,000 crores. Again, I want to break it down, while there is INR 22,000 crores of cash available, a large part of that is the restricted cash related to our obligations for maintaining. But now we've got a sizable amount of free cash, which is available, which is roughly around INR 10,000 crores, like I mentioned in my opening remarks, we are currently doing the planning for the next year. But what this cash does is give us the leverage to now start thinking about areas where we want to invest, areas where we want to invest from a growth standpoint. Petrus just mentioned related to digitization, our investment in systems and tools in order to drive productivity within the organization. And there are many more growth areas that we are evaluating currently, which we'll come back to you. But being in a much improved liquidity position gives us now the leverage to start exploring those growth investment opportunities.
Okay. And could you share the thoughts on competitive entities?
Yes. Sorry, I realized I omitted answering that question. You mentioned the initiatives, which are taken by the Tatas. I would say, in general, I would like to focus on the IndiGo performance and the IndiGo results. But having said that, the fact that there is some consolidation in the Indian aviation landscape the fact that AirIndia or the Tatas are taking initiatives, I think for -- by and large, for the Indian aviation market, it's a good thing. It will further mature. It will further develop, which eventually is a good thing for the market and for all the players in that market. Having said that, for us at IndiGo, we continue to focus on basically what has been the success of our company in the past 16 years, as I mentioned before, to make sure that we deliver our customer promise, the one which I just mentioned to you, in combination where cost leadership remains a very essence of our profitability going forward. So overall, market is developing solid, competition is there. But it's there in a different way maybe than it's what is in the past, and we focus on our own strength. And with that, we should be ready to deal with that competition.
The next question is from the line of Krupashankar NJ from [indiscernible] [ Spark. ]
My first question is on the yield side. Just wanted to get a sense as to how are the yields moving in January and February? And what do you foresee with respect to the yields? I know this is not a strong quarter vis-a-vis third quarter, but I just wanted to get a sense on that.
Krupa, again, these yields have softened compared to the third quarter. But -- and that's largely because of seasonality. But the good thing is that the yields are still holding up much higher than what they used to be pre-COVID level. So that's a positive kind of indication. But they kind of moderated down in line with the seasonality that we expected for Q4 compared to Q3.
And my second question was on the cargo operations. So just wanted to understand what are our aspirations out here? And is there any growth target that we have in mind? And is there any other further fleet additions, which one can expect more in the medium term?
So I think, overall, we started the cargo operation last year. That was, I would say, a bit start, which we were long awaited. So finally, we got the cargo freight coming in last year, and we started the first flight, both domestic and international. We have recently received our second freighter. On the short term, we have no other plans for that. We're now in the process of optimizing our planning on that, working around our procedures, making sure that we have a good sort of linkage of our enormous domestic network with the operation of these 2 freighters. So I would say it's work in progress. It's an important part, and it's supplementing the total business of IndiGo.
Last question, if I may. Just wanted to understand a little bit on the international side. So while I do understand -- I do note that international is close to about 105% of pre-COVID level. But we are seeing that certain geographies, especially in Southeast Asia, are well below average. So given that capacity constraints over the medium term with respect to OEs as well as supply chain challenges, are you expecting more and more capacity is deployed on geographies, which are just opening up?
Or -- and if at all, there is a higher traction, can international capacity expansion being given the preference vis-a-vis the domestic side of things, which is more a function of new airport addition perhaps?
No. Let me shed a bit of light on that. But today, domestic is, as we shared in the numbers, is the vast majority of our operation. That will continue to be the case going forward. Having said that, our growth in international will be higher than our growth on domestic. And I'm not sure if I understood your remark on Southeast Asia with a somewhat lower numbers. I think what we see is that the international markets are recovering, by the way they're opening with post-COVID measures. You may have seen some interruptions. We know that China is only very recently opening. But even Southeast Asia is not so long opened. So the recovery of these markets has been more driven by the fact that some of these markets open quicker or let some of the COVID measures go quicker or less quick rather than by a change of demand. We remain very optimistic. And I guess, the geographical position of India and the fact that we operate both from the north part of India as well as from the south part of India, it gives us a great opportunity to have very different international connections. And what we see -- what we operate out of Delhi is very different than what we operate out of Hyderabad. So if you see the position of IndiGo, I think we have a unique opportunity and a unique position really to develop our international network in basically all directions, matching it and linking it to the Indian metros we operate out of.
The next question is from the line of Sabri Hazarika from Emkay Global.
Congratulations on good set of numbers. So I have a few questions. The first one relates to the overall Indian passenger traffic demand. So we had last few years affected by COVID. So do you see more pent-up and more sort of catching up happening this calendar year also? Or do you think that the passenger traffic demand growth could go more to the ballpark run rate of, say, 2x or something of that of real GDP growth?
You said you have multiple questions. So this is your question?
Yes, this is the first one. Yes, this is the first one.
Okay. No. I think you addressed a very valid point, actually, both points you're addressing. If you look to the total recovery of the Indian markets, the total numbers of the market are not yet back to the pre-COVID levels. However, IndiGo is at this point in time higher than pre-COVID level. So we can expect going forward that the market will continue to grow significantly in order to catch up and sometimes the demand will be there also in the year to come. That's why we're optimistic on that outlook. If you combine that with -- and you mentioned that yourself, the ballpark number of aviation growth, especially in a market which is still growing a lot for aviation of 2x the GDP size, if you take the GDP outlook and you combine that with the earlier remark or still some pent-up demand, that's how also we come to comfortably giving a capacity guidance of north of the mid-teens for the year to come.
Okay. Okay. Second question is related to your fleet addition. So historically, your net fleet addition has been like quite robust. Of course, last year has been affected by issues. But I think Q3, again, you were able to catch up in something like 25, 30 sort of run rate is showing for this year. So this run rate will continue considering that you have an order book of 500. And where in down the line, would you have to like place another set of orders to maintain your expansion?
Well, we have seen indeed that's part of the success of IndiGo. I mentioned earlier, we crossed in January for the first time, I think in India, an airline operates more than 300 aircraft, and we are proud for all of us at IndiGo that we had that benchmark. And it's not only a very big number, but it's also a young fleet, and we recognize this having the youngest fleet for an airline with more than 100 aircraft, which, of course, helps to our fuel consumption, it helps our CO2 commission -- emissions, it helps to our sustainability effect.
So that foundation and that basis is very strong. We will continue to build at a similar number as we have done over the past few years. Our fleet for '24 or actually for the full year '24 to come early calendar year '23. We will have to see what's going to be the precise number. Of course, that depends on Airbus and the deliveries, but we foresee a similar rate of increase what we have seen over the past years. And if you don't mind, I don't give any speculations going forward on new orders. With an order book of 500, I think we're good for the time to come.
The next question is from the line of Pulkit Patni from Goldman Sachs.
Sir, my question is on yield. Any indicative sense of how much have yield compressed based on the first 1 month of data on a Q-o-Q basis?
We can't give you specific -- we don't have enough data to reflect while 1 month has gone by. But what you can do is do an extrapolation with the historical trends the way they move from Q3 to Q4, that will give you an indication.
Yes, historically has been about 3-odd percent, but this time around, based on our data, it seems to be a higher number, anyway.
It is slightly on the higher side, but not we can declare to you.
Fair point. So my second question is, given that we have cash now, could we think of buying planes versus leasing in the near term given that we are in an elevated interest rate environment? And in which case, the leasing cost or whatever you would be taking now would be coming at a higher cost. Is that fair to assume?
One can do that assumption. Nothing is off the table. I would just say that, Pulkit, because, again, buying an aircraft is kind of a long-term commitment of your cash also. We are looking at other avenues because we tend to remain asset light for the time being. But nothing is off the table. As we go through our planning cycle for the next year, we'll evaluate all this. Like I said, we do have that leverage now to play with various options given the free cash that is available with us.
The next question is from the line of Aditya Mongia from Kotak Securities.
Congratulations on a very strong set of result to all of you. The first question that I had was on this interplay between domestic and international, and you said you [indiscernible] international. I'm just trying to think through that the fact that you have so many domestic destinations, how do you think about the D-to-I and the I-to-I prospects that can come forward for an air like IndiGo?
Yes. I think and that's maybe surprising for some. The -- today's network of 76 and soon 78 domestic destination, they already do connect to our international network. So already today, we do have a set of connections and a set of connectivity in place in our network. And of course, we continue to go forward. Some of that connectivity is by design, and some of that connectivity is just like consumers finding out different travel parts and different routes. In the domestic space, we operate some 400 direct city pairs, but many of these flights indeed are connecting to international. So we continue with the development of both our domestic and international network. We continue to develop the D-to-I and I-to-D as you just questioned for.
And just a clarification, is I-to-I actually possible? I'm just trying to kind of suggest that, let's say, you as an airline are looking at China as a large market just pre-COVID and obviously didn't fructify as well the [ proof there. ] Is that even a possibility over a 3- to 5-year perspective that international passengers land in India combined with domestic passengers and go out on international flight?
That's already the case today, sir. But today, it's in relatively small numbers. So already today, passengers can connect, but with the growth of our network, and of course, we need to have the bilaterals in place, and we need to make sure that we have all the facilities in place to do that. But I mentioned before, I think the geographical position of India and the geographical position of our strong points in India are perfectly allowing us to further develop that connectivity, be it in Delhi, be it in Mumbai, but also be it in Hyderabad and other places where we do operate. So that international connectivity is there and will continue to be developed going forward. And maybe just to add here, if you look, you were very kind in appreciating the results. And of course, that's a mixture of all actions we are doing and enhanced connectivity is just one of them. So it's basically many of the initiatives we are taking are nicely coming together and supporting these results. And connectivity is really one of them.
The next question is from the line of Pramod Kumar from UBS.
Congratulations on great operational number. My question is on the international side, given that it's becoming increasingly large and the big focus for growth going forward, will you be in a position to share the -- broadly the revenue split or the split in even other operating metrics, if you can [indiscernible].
No, I think what we have shared with you was some of the share of ASKs we're having. That share number, which I just mentioned, was 23%. That share will go up somewhat going forward. We're not providing any sort of revenue breakdown per area. But the capacity share of ASKs, which is today around 23%, will move towards the direction of 30% in the year to come.
And historically, there's been always a perception that international has better profitability. But given the fact that yields in India have also surged in the recent quarters and load factors have also improved. So how should one look at the profitability equation between the domestic and the international operations going forward?
If we look to your -- have a closer look at your question, I think the fact that we are getting a different combination of domestic and international, it's a way also for us to be more agile and to spread. If the domestic international is strong, we can shift a bit more to that. If the domestic is strong, we can shift a bit more to that. And the combination, of course, creates that [ D and I ] and I-to-D connectivity we were just speaking about. So the philosophy of having that network and having the opportunity to tilt a bit more to 1 leg or the other leg, I think that will basically put IndiGo, if I may phrase it like that, more firmly on 2 feet going forward.
And final question on the domestic new locations what you can add? We are currently at around 75, 76. So where do you see this number in the next 2, 3 -- 2 years, let's say, given that new airports are also being opened up because these smaller cities and towns are actually bringing in a pretty good traffic and also are pretty viable. So how should -- what will be the target you will have in mind, say, 2 years out on the number of domestic destinations where you will operate?
A number of destinations is never a target in itself. We operate where there's a market where airports are opening, where we feel it makes sense for our customers to move forward. Again, we just announced 2 new ones earlier today to Nashik and Dharamshala, if I pronounced it correct. That's number 77 and number 78. With more airports opening and a wide range of initiatives from both government as well as private entities to move forward on that, we will continue to provide that airlift. And again, if you see where India stands and development of the economy and also the development of some of the regional economies that is just speaking to what aviation brings. So a number of, I would say, high single-digit growth of destinations per year, we should be able to do that. But again, it's not an objective in itself, maybe it's an outcome of airports going in operation and market developments.
The next question is from the line of Ashish Shah from Centrum Broking Limited.
Sir, I have 2 questions largely on the operating cost side. One, in terms of the employee cost that you are seeing this quarter on per unit basis, is this the normalized levels? Or there is still some impact of salary normalization that could be expected in the quarters to come? And maybe I'll just complete the second question as well, sorry -- yes. I'll just complete the second question, sorry. The other one being on the supplementary rental and maintenance costs. Now that number is a little elevated today probably also because of the aircraft groundings. Now what is the kind of savings that one could expect in terms of the unit cost on that particular subject as we go forward into the next year and hopefully, when things normalize? Those are the 2 questions.
So on the first part, the salary, obviously, we did the retraction related to all our employees in the quarter. So this is now going to be more level loaded and levelized kind of a salary per ASK cost that you'll start seeing subject to, obviously, investments that we are planning to do for growth where we will probably have some deployment of further resources, but you can assume this to be a more levelized cost going forward on a quarter-to-quarter basis. Related to SR again, the supplementary rentals, this is where you'll see on a unit cost basis, we are somewhere around INR 0.70 per ASK. This is where we will remain. Obviously, there's a lot of moving parts related to AOGs, which can impact this. But on a levelized basis, INR 0.70 per ASK is where we are today, and we've been there for a couple of quarters is where we see ourselves.
The next question is from the line of Prateek Kumar from Jefferies.
My question is -- first question is on grounding of aircraft for yourself and peers. Is it significant? And when do you expect these aircraft coming back in operation? And has it benefited, particularly the yields in the past 6 months? And my second question is on international operations. When you see -- while you have highlighted on this, but from 23%, when you see that somewhat going to 40%, does that tie up with your order of XLRs over next 3 years?
Let me take your first question on the AOG situation and the -- when do we expect them to get back into service. It all depends when the supply chain will be able to provide us all the things we need. There are some different reports out there. We're in close contact, of course, with the OEMs, and we hope that the situation will improve in the course of the year to come. But again, I think here, we depend really on the OEMs and the supply chain facilitation on that part. Your second question, did it help to push on the yields? I wouldn't say so. With the OEMs, of course, we discuss to get the aircraft back. I told you, we have taken a lot of measures such as lease extensions to more or less operate what we had planned for. So therefore, we could maintain our capacity guidance despite the situation we have not adjusted our earlier capacity guidance. So with that, I wouldn't link that to any sort of rise in yields. Your last point to international, I mentioned -- you mentioned 40%. It's not a number which I mentioned for next year. I said, today, we are 23%. Next year, we are going in the direction of 30%, not sure what is the precise percentage, where we will end. And we just -- we sort of take it from there what would be the next step in going forward, depending on bilaterals, depending on further market development. And of course, after that, the XLRs will help us to increase our range from the various Indian cities and with that further develop our network.
And just related question on fleet. Is there any outlook on retirement of pending CEO fleet for the company?
Could you repeat that question, please? Sorry.
Retirement for the pending CEO fleet for the company?
Yes, we take, of course, a very prudent approach. Again, we have had still some CEOs in operation. And one of the measures, which we mentioned earlier to deal with the AOG situation, is to continue some of that -- these aircraft in operation. And we will do that, again, to mitigate the AOG. When that situation is more stable and will be better because of the supply chain, then we can have a different view and a different look at it.
The next question is a follow-up question from the line of Aditya Mongia from Kotak Securities.
My first question is for the comment made from your side that versus pre-COVID times, the yields are sticking out to be better than where they were on a pre-COVID basis. I'm assuming adjusting all the costs [ adjusting ] in that comment. Given this is a 2-tier market, do you expect a scenario to sustain for much longer? Given this a 2-tier market, do you think that versus pre-COVID basis, the yields adjusted for costs are not going to be in a different zone for some time to come?
No, I think there's different elements which comes into play. One is some pent-up demand, which is coming back and that's coming back all over the world, and we should not look at yields in isolation for the situation in India. We should also look at what's happening in other places in the world. And we can see a very similar trend. So one is the pent-up demand. The other part is there's inflation, basically, in many, many sectors, and that inflation, of course, is also a part of some of the yield development. Last but not least is, of course, the seasonal elements in that. And the third quarter, of course, traditionally is a very strong season, and part of that robust yield development is, of course, driven by the seasonal effects we're having.
Understood. And the second question that I had was just to kind of pick your opinion, Petrus, on this. India as a market for domestic traffic and international traffic has grown at 2x [ GDP ] and 1x [ GDP ] for almost a decade also. Do you envisage these numbers changing over time?
Yes. I'm almost 6 months now in India. And what I witnessed here in terms of GDP growth, in terms of market growth and in terms of willingness to travel, I think that is a reflection of what we see in the numbers here. Looking at some of the economic reports and economic projections going forward, I think we do expect and that's, of course, in our plans as well. We do expect to further develop that not only from the Tier 1 cities but also from the Tier 2 cities. So that really connects also to our network strategy. And combination of a young population, an ambitious growth plan. Some of the government plans in place, such as the developments of airports, some of these policies in place are really helping stimulating the economy at large. And for us as an airline, we're part of that economic development.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Petrus Elbers for closing comments. Thank you, and over to you.
Thank you so much, ladies and gentlemen. Thank you for participating in this call. Maybe a few closing words that the third quarter for us was obviously a very strong quarter, both operationally and financially, in the backdrop of this robust demand for air travel. We were very pleased to see that this wide range of initiatives that were set in motion across the organization have started to yield results. And with that, the highest ever quarterly revenue, I think it speaks to the commitment of the IndiGo teams and the trust and the loyalty of our customers. And with that, I'm very thankful to our customers and all the IndiGo employees who enabled us to achieve this performance. The robust profit, obviously, is important, especially after this range of quarters due to COVID, which were much lower. So this really enables us to start rebuilding our company and start investing in the future, and Gaurav mentioned a few elements like investing in digitization, investing in a lot of these elements. So profits are needed, again, both to rebuild as well as to invest in the future. And with that, this quarter has been a very important milestone for that. So thank you for that. And with the plans going forward, we continue to serve the market with further capacity growth across domestic and international routes. Thank you very much.
Thank you very much. Ladies and gentlemen, on behalf of IndiGo, that concludes the conference call. Thank you all for joining us, and you may now disconnect your lines.