The statement sums up the difficulty in surviving the aviation industry.
The hub-and-spoke distribution paradigm (or model or network) is a system of connections arranged like a chariot wheel, in which all traffic moves along spokes connected to the hubat ,the center. The model is commonly used in industry, in particular in transport,telecommunications and freight, as well as in distributed computing.
1. Sale - leaseback Program: This was the first in the Indian aviation industry. As the name suggests it refers to buying an aeroplane from the manufacturer and selling it to a leasing company. This ensures that the company's balance sheet remains relatively debt free. This has helped the company to have relatively young fleet at any point if time as they have the option of not renewing the lease of older planes. This ensures safety and builds the confidence of the passengers in the airline.2. On time performance: It has one of the best on-time performance which it strives to maintain even in the face of poor infrastructure. This actually helps to build a positive image in the minds of the passenger.3. High Passenger load factor: The focus is purely on offering the cheapest and affordable fares. This has ensured the airline to have high passenger load factor. One could argue that Air Deccan was offering cheaper fares. Yes they were but it was irrational pricing which could not be sustained. They are very transparent in their pricing and this was what is helping them to fill up their planes and people flocking to Indigo than to others.4. Low Cancellation: According to the DGCA data, Indigo has 0% cancellation of flights. This is the best in the industry where every player complains of poor airport management and infrastructure. They have showed to the entire industry how to run an efficient airline and could be a role model to others.5. Lean Workforce: It has one of the leanest workforce amongst the airline companies. They operate a fleet of 40 planes with just 4000 people which translates into a ratio of 1:100 which is better than the worldwide industry average of 1:125. Obviously this helps in saving costs and ultimately drives up their profits. Also their top management is less heavy and hence the decisions could be taken faster and better.
Aviation IndustryRichard Branson, the aviation entrepreneur once joked that"The easiest way to become a millionaire is to start off as abillionaire and then enter the aviation business".
Company Owners• Set up in early 2006 by Rakesh Gangwal and Rahul Bhatia, of InterGlobeEnterprises• InterGlobe holds 51.12% stake in IndiGo and 48% is held by CaelumInvestments, a Virginia, US based firm, run by Rakesh Gangwal
• IndiGo is the largest low cost carrier inIndia and is Indias largest carrier bymarket share as of August 2012.• As of March 2012 it is the only airlinein India making profits.• IndiGo operates to 33 destinations inIndia and abroad with 373 flightseach day.• Unlike most low cost carriers, IndiGouses a hub and spoke model used byfull service airlines where the airlineflights to different destinations arerouted through its hub.Company Statistics
Awards and achievements• Best LCC by the Airline Passengers Association of India (2007)• Best LCC at the Galileo Express Travel Awards (2008)• Skytrax Central Asias best low-cost airline award (2009)• CNBC Awaazs Travel Award for best low cost airline(2009)• Safety Excellence Award by Rajiv Gandhi International Airport (2009)• Most Admired Travel Product of the Year 2009 by SATTE (2010)• Skytrax Central Asias best low-cost airline award (2010)• Best Domestic Low Cost Service Airline for the Year 2010 by Travel AgentsAssociation of India (TAAI) (2010)• Safety Excellence Award by BIAL (2010)• Skytrax Central Asias best low-cost airline award (2011)
Indigos success can be attributed to certain things which has donedifferently as compared to others1. Single type of airplane to reduce training and service cost2. On time performance3. High Passenger load factor – Flight occupancy percentage4. One of the lowest Cancellation rate in industry5. Lean Workforce6. No frills such as free food/drinks, loungesSuccess Factors
Going International• IndiGos first international service was launched between New Delhiand Dubai on 1 September 2011.• Over the following weeks, the international services were expanded toserve Bangkok, Singapore, Muscat and Kathmandu from New Delhi andMumbai.
Rapid Expansion• August 3,2011- IndiGos 5th anniversary• Fleet of 42 Airbus 320 aircraft and a market share of 19.2%• On its 6th birthday this year, fleet has grown to 58 aircraft, implying thatRahul Bhatia-promoted carrier added 16 aircraft in the last 12 months.• By early 2012, IndiGo had taken the delivery of its 50th aircraft in less than6 years to capture more than 27% of market share• IndiGo is known to have placed the largest order in commercial aviationhistory during 2011, when Airbus won the US$ 15 billion deal for 180aircraft
Positioning StatementQuestion to the MD- Rahul Bhatia -How would you like to position Indigo?Answer.“Lowest Cost Structure but not at the cost of Quality.”
Positioning• Low cost structure and decent quality (no compromise)• Main market – Customers sensitive to Cost and On-time travel• New segment – Corporate bookings to help organizations cut travel costwith on-time travel
Primary Research• Survey with 11 questions.• Number of respondents - 118
Focused Group Discussion OutcomesAim of Discussion – to understand how Indigo ispositioned in minds of people and what do theyseek for?• Short duration trips - comfort is not main issue• No class differentiation – i.e. only one class• Maximum value for money• Major Competitors – SpiceJet, Go Air, JetLite• Low cost Airline• Only Indian carrier operating with profits• On-time performance• Good in flight Experience• Seats not comfortable• Nice crew behavior and cleanliness
Points of Difference• On time performance.• GET PACKING Tie up with hotelsPoints of Parity• Low costs• Online ticket booking
SWOT - StrengthsPrimary Research findings -• High brand awareness• Most of the customers are satisfied with customer behaviour• Flights are available to customers when required• Indigo provides with low cost flights• Indigo is best –in- industry stats for On-Time PerformanceSecondary Research findings -
SWOT - WeaknessesPrimary Research findings -• No class differentiation – i.e. only one class.• Customers complain of uncomfortable seats.• Inability to serve more customers in single flight.Secondary Research findings -
SWOT - OpportunitiesSecondary Research findings -