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INDIGO AIRLINES casestudy
- 1. 1 IndiGo - FlyingHigh * Balasubramanian * Aravind * Vignesh * Sendil * Vikas * Navin * Srivatsan
- 2. 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!
- 3. Half of IndiGois foreign-owned Rakesh Gangwal – Former CEO of US Airways & owner of Caelum Investments (LLC, USA) Rahul Bhatia – Group managing director of InterGlobe Enterprises Aditya Gosh – President
- 4. 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
- 5. Internal Environment Business Model Operations Company Image • IndiGo focuseson 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
- 6. Internal Environment Business Model Operations Company Image • A largefleet 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
- 7. Internal Environment Business Model Operations Company Image • Envy ofall 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
- 8. IndiGo - External(Micro) Environment
- 9. 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
- 10. Fare Comparison IndiGo -External (Micro) Environment: Industry Competition
- 11. 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 consumers Advantages • Cheaper • Takes almost same time IndiGo - External (Micro) Environment: Substitutes
- 12. External Environment (Macro) Political Economic SocioculturalTechnological 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 13 Ontime departure Consistent pricing policy Clean aircraft Good onboard service Strong business model No frills Lesser fleet size Satisfied & motivated employees
- 14. 14 Efficient leadership Market leaders High load factor Single typeof flight Employees/Fl ight Brand image & loyalty Effective marketing Good WOM publicity IndiGo - Strengths
- 15. IndiGo - Weaknesses 15 Image Limitedmargin Limited routes Flight type & Size Less differentiation Short lived innovations Un-served cargo segment Image of low cost airline
- 16. IndiGo - Opportunities 16 Increased domesticair traffic. Expansion to International markets. Frequent flyer passes Loyalty Programs Develop a separate brand Tie up with corporates
- 17. IndiGo - Threats 17 Highly competitive sectorwith zero tolerance Competitors operating in the same routes Competing with globally operating airline group Increasing labour cost Scarcity of pilots Depreciating rupee value
- 18.