History Early beginnings: Airbus 320-200:Rakesh Gangwal Rahul Bhatia
Rapid ExpansionRise to Indias largest airlinesDestinationsOnboard… …
Company Information IndiGoParent Company InterGlobe EnterprisesCategory Indian domestic sectorSector AirlinesTagline/ Slogan Go IndiGoUSP On Time Performance, Lowest Price
Contd…. STPSegment Cost Conscious PassengersTarget Group Lower Middle Class / Middle ClassPositioning Low Cost No Frills
Going International:First International service IndiGo’s first international flight to Dubai is greeted with a traditional water cannon salute.
Mission"IndiGo is a very quality consciousairline and passenger safety isparamount to our company’s missionand values," the Gurgaon-based airlinesaid in a statement."IndiGo is in line with the ‘strategicplan of the ministry of civil aviation(MOCA) for 2010-15’, whichrecognizes the need for growth."
VisionIndiGo to go ahead with fleet expansion"We will be adding 12 aircraft in the current year. Wehad a fleet of 48 aircraft in December 2011 and thisnumber will reach 60 aircraft in December 2012,"Aditya Ghosh, presidentIndiGo is the only profit making airline in the country,with a market share of 19.8 percent in November, 2011.
External AnalysisAirline Industry Attractiveness Foreign equity allowed: Attraction of foreign shores: Rising income levels and demographic profile: Untapped potential of Indias tourism: Glamour of the airlines:
Porter’s Five Forces strategy for Airline Industry
Threat of New Entrants Product differentiation: Switching cost:In aviation industry the major entry barriers can be: Government regulations
Bargaining Power of SuppliersIndiGo fleet comprise of Airbus-A320 and the switchingcost is high due to the limited number of suppliers.The brand value of suppliers is high due to their lessnumber and results in higher bargaining power for them.The proof of evidence for high power enjoyed by ATFsuppliers lies in the fact that the ATF prices constitute 35-40% of the costs in India compared to 20-25% globally.
Bargaining Power of buyersBuyers in airlines industry are large in number and highlyfragmented thus lowering their power .With the growingIndian economy and increasing low cost carriers, the buyershave increased and so have the growth opportunities.The switching cost is minimal since there are multiplealternatives available. It is not difficult to move from oneairline to another or to switch to a substitute.
Competitive RivalryVery little scope for differentiation betweencompetitors’ products and servicesSuppliers of aircrafts are the same, i.e., Boeing andAirbus. Hence supplier’s bargaining power is high.Switching cost of customers is high for low costcarriers, i.e., there is no brand loyalty. Closestcompetitor of IndiGo is Spice Jet followed by Go Air
Availability of SubstitutesThe substitute for low cost airline company is the railways.But this substitute is not very powerful due to the followingreasons: Customers use airline transport as it is convenientand saves travelling time. So trains cannot work as asubstitute to save time.Secondly, many customers use airlines as a status symbol.So again, trains cannot substitute for prestige. So if weconsider IndiGo airlines, the direct substitutes are the otherlow cost carrier’s like Spice Jet and Go Air. So in this case,threat of substitutes is high as the switching cost betweenlow cost carriers is low.
OpportunitiesThe flight density of IndiGo airlines is limited in domesticmarket; hence there is a big scope to increase the flightfrequencyOpening up of international routesLargest market share among LCCs in Indian MarketMiddle class taking to the skies
ThreatsATF (Air Turbine Fuel) prices have increased radicallysince 2005Foreign and private players often poach work-force ofcompetitorsBarriers to exit in aviation industry are high because ofhigh capital investment, nongovernment restrictions andloss of brand image.
AwardsThe Best Low-Cost Airline in India. Outstanding Start upThe Best Staff Service in India for awardthe first time.
Advertisement StrategyHoarding at airports.Social networking medium- Facebook, Twitter, YouTube.Multi- storeyed building and offices.Magazines.Sponsoring fashion shows, talent hunts, new year partiesetc.
Internal Environment AnalysisResources, Capabilities and Core Competencies are the keyelements of the Internal Environment. The resources aretangible and intangible.
Tangible resources Aircrafts: Human Resources: Fuel:
StrengthsIndiGo has high brand awareness and brand equity.Cost leadership: Successful implementation of low coststrategy.Highly efficient management that ensures high rate of on-time arrivals.Continuous innovation to improve on non-price factors.Tie-up with hotels
WeaknessesScope of product differentiation is less.IndiGo is not exploring the untapped domestic air cargomarket.Not on too many routes as compared to competitorsStill has to establish itself on international destinations