Download - INDIGO AIRLINES casestudy
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
Internal Environment
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
Internal Environment
Business Model Operations Company
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
IndiGo - Internal Environment
Internal Environment
Business Model Operations Company
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 - Internal 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
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
13
IndiGo - Strengths
On time departure
Consistent pricing policy
Clean aircraft
Good onboard service
Strong business
model
No frills Lesser fleet size
Satisfied & motivated employees
14
Efficient leadership
Market leaders
High load factor
Single type of flight
Employees/Flight
Brand image & loyalty
Effective marketing
Good WOM publicity
IndiGo - Strengths
15
IndiGo - Weaknesses
Image
Limited margin
Limited routes
Flight type & Size
Less differentiation
Short lived innovations
Un-served cargo segment
Image of low cost airline
16
IndiGo - Opportunities
Increased domestic air
traffic.
Expansion to International
markets.
Frequent flyer passes
Loyalty Programs
Develop a separate
brand
Tie up with corporates
17
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