INDIGO AIRLINES casestudy

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IndiGo - Flying High * Balasubramanian * Aravind * Vignesh * Sendil * Vikas * Navin * Srivatsan

Founded in 2006• By Rakesh Gangwal & Rahul Bhatia• Parent Company: InterGlobe Enterprises

Fleet• Size of 68 aircraft (A320 Family)• 422 daily flights across 34 destinations

Services – Low cost airline• No Business or First Class! Only Economy• No complimentary meals or in-flight entertainment

Flying High – India’s only profitable airline!

Half of IndiGo is foreign-owned

Rakesh Gangwal – Former CEO of US Airways &

owner of Caelum Investments (LLC, USA)

Rahul Bhatia – Group managing director of

InterGlobe EnterprisesAditya Gosh – President

Micro Environment

Customer Base

Competition & Price War

Suppliers

Resources

Internal Environment

Services & USP

Business Model

Operations

Company Image

IndiGo Business Environment

Macro Environment

Political

Economic

Socio Cultural

Technological

The largest domestic airline in India

The only airline in India to churn out profits for the last 5 years


Business Model Operations Company

Image

• IndiGo focuses on doing one thing, and doing it well

* One type of airplane - brand-new Airbus A320s * One type of fare - low * One type of customer service - professional * One way to deal with delays and cancellations - honestly

• “On Time, Hassle Free”

IndiGo 29.70%

Jet 25.30%

Air India 19.20%

Spice Jet 17.50%

Go Air 8.30%

IndiGo - Internal Environment



Image

• A large fleet comprising of Airbus A320 only

• Aircrafts Communication Addressing and Reporting System (ACARS)

• Extremely efficient and motivated crew

• ‘On Time’ and ‘Hassle Free’ are more of internal brands

• Adoption of ‘sale and lease-back’ agreement for aircrafts

• Required Navigation Performance (RNP) Approach for landing

• Strictly no frills

• No frequent flyer programs and credits for flying miles




Image

• Envy of all competitors

“The best is Indigo; its their efficiency”Mittu Chandilya, CEO, Air Asia India

“The best low-cost carrier”SKYTRAX Global Airline Awards

“There has been a downhill for civil aviation except for one airline that defies

odds and claims to be profitable”Vijay Mallya, Chairman, Kingfisher Airlines

• A media and industry-friendly image• Good ‘word-of-mouth’ publicity

• Short, simple yet effective marketing strategies


IndiGo - External (Micro) Environment

Aircraft manufacturer (Supplier)• Indigo has a leaseback deal with Airbus • Limited supply base• No scope for negotiation

Air Turbine Fuel suppliers• Rising ATF prices & only four ATF suppliers IOC, HPCL, BP & ONGC

Customers• Buyers in airlines industry are large in number and highly fragmented thus lowering their

power .• The switching cost is minimal since there are multiple alternatives available. It is not

difficult to move from one airline to another or to switch to a substitute

Resources• Shortage of trained and experienced commercial pilots .• In airline industry , finding a appropriate labor force is very costly.due to the

liberalization of policies by government, there is a talent-drain and losses.

IndiGo - External (Micro) Environment

Fare Comparison

IndiGo - External (Micro) Environment: Industry Competition

Threats from Railway• Cheapest and comfortable mode of transportation • Improvement on existing conventional lines upto 200km per hour • Proposal of introducing high speed trains (Feasibility under progress)

Threats from Roadways • Several expressways are developed or development in progress.• Chennai – Bangalore Expressway • Mumbai – Pune Expressway

Over short distances railways and roadways are also an option for consumersAdvantages• Cheaper • Takes almost same time

IndiGo - External (Micro) Environment: Substitutes

External Environment

(Macro)Political Economic Sociocultural Technological

Political• Open sky policy• Deregulations in different spheres• Reduction in FDI Limits : 49% for Airlines, 100% for Airport

Economic & Natural Environment• Rising ATF prices & only four ATF suppliers IOC, HPCL, BP & ONGC• Growing middle class income• Tourism industry growth

Socio-cultural• Growing middle class (2005 : 300 million, 2010 : 400 million estimates)• Growing middle class income• 6 million foreign tourist visited India in 2012 compared to 3.2 million in 2006

Technological• Modernization of Airports (Ex. Instrument Landing System(ILS) & RNP)• Developing Greenfield Airports with Private sector (Ex. Bangalore Airport Corp.

Ltd.)

IndiGo - External (Macro) Environment

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IndiGo - Strengths

On time departure

Consistent pricing policy

Clean aircraft

Good onboard service

Strong business

model

No frills Lesser fleet size

Satisfied & motivated employees

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Efficient leadership

Market leaders

High load factor

Single type of flight

Employees/Flight

Brand image & loyalty

Effective marketing

Good WOM publicity

IndiGo - Strengths

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IndiGo - Weaknesses

Image

Limited margin

Limited routes

Flight type & Size

Less differentiation

Short lived innovations

Un-served cargo segment

Image of low cost airline

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IndiGo - Opportunities

Increased domestic air

traffic.

Expansion to International

markets.

Frequent flyer passes

Loyalty Programs

Develop a separate

brand

Tie up with corporates

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IndiGo - Threats

Highly competitive sector with

zero tolerance

Competitors operating in

the same routes

Competing with globally

operating airline group

Increasing labour cost

Scarcity of pilots

Depreciating rupee value

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Thank You