INDIGO-Strategy Presentation Updated

7/27/2019 INDIGO-Strategy Presentation Updated

1/17

INDIGO-STRATEGYPRESENTATIONRoll no-01,04,14,36


2/17

Introduction to the airline Industry

and Indigo airlines

India is one of the fastest growing aviation

industries in the world.

The growth in the aviation industry looked

promising and hence attracted many low costcarriers like SpiceJet, GoAir and IndiGo.

IndiGo is the latest entrant as a low cost

carrier in the aviation industry of India. IndiGo serves approximately 33 cities with a

fleet of approximately 65 A320s.


3/17

SWOT Analysis

STRENGTHS WEAKNESS

1) Backing from promoters 1) scope for differentiationis low

2)Brand awareness 2) services can be quickly imitated3)Safety record 3)Quickly changing business

conditions

4)Well trained staff

OPPORTUNITIES THREATS1)Increasing middle class 1)Fuel price surge

2)Cargo market 2)Government interventions

3)Increase in taxes

4)Economic downturn


4/17

PESTLE Analysis

Political/Legal factors 49% FDI in domestic airline sector

Lack of government initiatives stalling the growth

Slow growth of airport infrastructure because of

government impasse Economic factors Business cycles impact airline industry( treated as

luxury during economic downturn)

High fuel prices and surging taxes

Depreciating value of the rupee( leases, expatpayments in USD)

Industry operates under High Cost of Capital.


5/17

PESTLE Analysis..

Social factors Changing travelling habits

Raising income levels in tier 2 and tier 3 cities

Small things like serving right food matters in a socially

sensitive country like India. Technological factors

Growth of e-commerce and based ticketing solutions

Helped in reducing check in times

Adding value to customers and airline using NDS(New

Distribution Capability) Environmental factors

Noise

Low air quality


6/17

PORTERS 5 FORCES

Threat to new entrants Very high initial capital requirements

Stiff competition from existing players

Product/Service differentiation is low

High barriers to exit

Bargaining power of suppliers High bargaining power

Number of suppliers are very few and hence highbargaining power.

There are only four suppliers for ATF (Aviation TurbineFuel); IOC, Hindustan Petroleum Corporation, BharatPetroleum and ONGC.

Due to shortage of commercial aircraft pilots in India thesupply of pilots is concentrated, hence increasing their


7/17

PORTERS 5 FORCES..

Bargaining power of buyers Large number of buyers and highly fragmented lowering

their power

Low switching costs

Competitive rivalry Differentiating strategy fails due to more or less

homogeneous service.

Suppliers of aircraft are the same- Boeing or Airbus.

Switching costs are low for low cost airlines and hence low

brand loyalty. Availability of substitutes

Air travel is preferred to save time and for convenience andhence no direct substitute


8/17

Key Success Factors

People

Products and Services

Route System

Revenue/Cost Control

Financial Management


9/17

n erna na ys sResources &

CapabilitiesTangible Resources

PhysicalResources

Human Resources

Technology

Resource Financial Resource

IntangibleResources

Reputation Social capital

Brand Awareness

EmployeeRelationship


10/17

Internal Analysis - Low Cost

Leadership

Financial Health

High Cash Flow

Fourth Indian low cost

carrier to operateoverseas

Profitable airlinecompany in India -Order of 180 newaircrafts A-320 USD15 Billion

Low-Fare Flight

Best low cost airline ofIndia & Central Asia

Scored a hatrick atSKYTRAX World

Airline Awards 2012

CostEffectiveness

Operating onsecondary airport

E-ticketing Fewer employees per

aircraft

More seats per aircraft

Selling and leasingback plane

On-time flights

Always on time andoften before time

Low TurnaroundTime

Turnaround time forIndigo is less than30 minutes

No complimentary

meals


11/17

Value Chain

INBOUND

LOGISTICS

OPERATIONS OUTBOUND

LOGISTICS

MARKETING

AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY

DEVELOPMENT

HUMAN

RESOURCE

MANAGEMENT

FIRMINFRASTRUCTURE

Adapted with the permission of Michael E. Porter from Competitive Advantage: Creating and Sustaining Superior

Performance, copyright 1985 by Michael E. Porter.

- Financial Policy - Accounting- Regulatory Compliance- Legal - Community Affairs

Pilot Training

Safety Training

Agent

Training

In-flight

Training

Baggage Tracking

System

Promotion

Advertising

Advantage

Program

Travel AgentPrograms

Group Sales

Ticket

Counter

Operations

Gate

Operations

AircraftOperations

On-board

Service

Baggage

Handling

Ticket Offices

Route Selection

Passenger Service

System

Yield Management

System (Pricing)

FuelFlight Scheduling

Crew Scheduling

Facilities Planning

Aircraft Acquisition

Information Technology Communications

Product

Development

Market Research

Lost

Baggage

Service

Complaint

Follow-up

Baggage

System

Flight

Connections

Rental Car

and HotelReservation

System

Computer Reservation System, In - flight System

Flight Scheduling System, Yield Management System

Baggage Handling

Training

Flight, route and

yield analyst

training


12/17

Competitive Strategies

1. Air craft management

Indigo purchased the aircrafts, then sold them

to intermediary and then hire the fleet on lease

from then on contractual basis.

Use single configuration aircraft.

For maintenance, it allied with airbus

Indigo preferred airbus over boeing as the fuelefficiency of the former is greater than the

latter.


13/17

2. Growth and Expansion

strategy It adopted a strategy with one aircraft and adding one after six

week. In other way is that they first tested one market and afterestablishing foothold in that market, they expanded to othermarkets.

Shorter trajectory for landing.

Does not require ground based navigation Helps in reduction of green house gas emission.

Turnaround time is less

Low frills

Hub and spoke models for flights

IndiGo preferred to wait and have a solid business plan in place. Itsplan was to stick to operating a single configuration aircraft,providing point-to-point connectivity.

IndiGo, however, continued its gradual expansion and waited forfive years to launch its international operations, although, arguably,the airline had to wait those five years because of airline industry

regulations. Still, it wasn't tempted to find loopholes to expand aggressively in


14/17

Tetra Threats

Added

Value

Appropriated

Value

Threat of Imitation

Imitation of business

model

Economies of Scale

Imitation of aircrafts

Human Resource

imitation-Cat 3 compliant

pilots

Cost Leadership rises

threat of retaliation

High Imitation Lag

High power of aircraft

suppliers- Boeing andAirbus

Limited number of

suppliers for ATF

Government Interference

High power of supplier of

pilots due to shortage of

pilots

Railways

Technological

Advancement

Premium Airlines like Air

India, Jet Airways

Either of the LCC like

Spicejet, GoAir

TrainingStrikes

Benchmarking

Sustaining cost leadership

by maintaining economies

of scale and resources

Payment System-

incentives

Threat of SlackThreat of Hold Up

Threat of Substitution


15/17

Market Share and competitors

share


16/17

Bibliography

www.centreforaviation.com

www.goindigo.in

www.livemint.com

www.economictimes.indiatimes.com
http://www.centreforaviation.com/http://www.goindigo.in/http://www.livemint.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.livemint.com/http://www.goindigo.in/http://www.centreforaviation.com/


17/17

THANK YOU

Documents

INDIGO-Strategy Presentation Updated