IndiGo Airlines: Market Plan

H4G9 Great Lakes Institute of Management

Executive Summary
y India s best performing Low Cost Airline in terms of y y y y

profit Established in 2005 as a subsidary of Interglobe Interprises A fleet of 30 aircrafts making 170 flights daily, across 22 destinations in India Plans to acquire 125 new aircrafts by 2025 Plans to serve 100 cities in India, South East Asia, Middle East and China by 2025

The IndiGo Dream«

Why IndiGo ?
y Emergence of the Great Indian middle class willing to

spend money for swifter travel y For the Individual on the Go,who values time and ontimliness y Budget travel is not cheap travel, Quality of Service
Mission Statement :
To be the best Airline in India by providing the following values to the customer: - Affordable Fairs - Ontime performance - Hasslefree Service

Situation Analysis
Macro Environment Analysis: Political
y y y y

Open Sky Policy Deregulations in different spheres Low entry barriers to attract new companies FDI limits y 49 % for airlines y 100% for airports y Extensive airports development planned

Macro Environment Analysis: Economic
y Rising income of middle class y GDP growth of more than 8% and expected rate

in two digits y Average salary increase highest, 14% in the world y Tourism industry growth: 6 % in 2009

Macro Environment Analysis: Technological
y Modernization of Airports y Better handling of Aircrafts, passengers & cargo y Developing Greenfield airports with Corporate

collaboration

Macro Environment Analysis: Social & Cultural
y Rising middle class:

1993 - 1999 : 39.5 to 56.7 million households y 2005: 300 million households y 2010: 400 million households (Estimated) y Leisure travel increased by 15 % in 2009 y Number of foreign tourists in 2009-2010: 5.1 million y Status symbol to travel in plane. Glamour.
y

Macro Environment Analysis: Demographic
Changed travelling pattern of consumers Highest percentage people in age group 20-25 Educational environment being improved Shift towards nuclear family concept increases travel frequency y Middle class income above Rs.90,000 pa
y y y y
(Source: NCAER)

y High energy cost. The cost of ATF in India for

domestic airlines is almost double than that in the international market

SWOT Analysis

Strengths
High Brand Awarness Cost Leadership High Efficiency Innovation Tie Ups Hassle Free

Weaknesses
Less Differentiation Too many players Short lived innovations Untapped domestic cargo segment

Opportunities
Freight market Increased Domestic Air traffic International Markets Chartered services Regional connectivity Airport upgradation

Threats
High ATF prices Competitors Economic Slowdown Poaching Government policies Scarcity of pilots Cost inflation

Segmentation, Target & Positioning
People for Buisness travel Cargo Services People for Buisness travel

Charter Airways

Leisure travel/Holiday

Leisure travel/Holiday

New Market Expansion
Buddhist Circuit Ta il Nadu Andhra Pradesh adhya Pradesh Karnataka Punja Anda an

Kolkata, Bodhgaya, Patna, Varanasi Chennai, adurai, Coi atore

Vijaywada, Vishakhapattna Bhopal, Raipur, Indore Belgau , angalore

Chandigarh, A ritsar Port Blair

Basis for Segmentation
y Geographic

- Region, Rural and Semi-urban areas y Demographic - Income, Occupation, Education y Psychographic - Socioeconomic Classification, Lifestyle y Behavioral - Occasions, Benefits, Usage Rate

Additional Characteristics of Target Market
y Socio-economic revolution is underway. y Increase in income of Middle class and increase in volume of affluent sections of society.

Strategic Focus and Plan
Core Competencies
y One type of airplane - brand-new Airbus A320s y One type of fare - low y One type of customer service - professional y One type of route - serving destinations within

India y One way to deal with delays and cancellations honestly

Sustainable Competitive Advantage
Resources
Aircrafts Human Resources Brand Equity High Social Capital Employee relationship Fuel High Yes No No No No No

Value
High

Costly to Imitate
No No Yes

Easy to substitute
No No No

High

High

Market Strategy
y Be visible go all out to project yourself as the

Future Market Leader y Go Local Connect with the Middle class y Focus on your Core Competencies and market them y Aim to compete with Railways in the long run

Market Research
The Five Indian Flyers: Market Share (Mar 2008)
17.8% 26% 23% 14.7% 11.9% IndiGo spiceJet Kingfisher JET AIRWAYS AIR INDIA

The Five Indian Flyers: Business

The Five Indian Flyers: Financials

The Indian Flyers: Customer Satisfaction

Consumer Preference

Competitive Forces
Highly Volatile Oil Prices Multiple Market Players

Highly Competitive Prices Limited Price Ceiling Threat from Potential Entrants

Pricing Strategy
Market Penetration and Price Differentiation
y Low Cost And High Quality of Service y Price to be diffrentiated with respect to days before

the travel. y High seating density and load factor. y No frills such as free food/drinks or lounges y Targeting segments locally based on seasons and festivals

Components of Pricing
y Base Fare y User development Fee (based on airports) y Air Fuel Surcharge (Variable on ATF Prices) y Passenger Service Fee y Load Factor ( Average Seat Per Mile) y Ticket booking prior to travel based on number of

days.

Price Determination
Kolkata to Bodhgaya/ Chennai to Coimbatore (425 KM):
1) Passenger Service Fee 2) Fuel Surcharge Cost ATF Prices Average seat capacity Load factor Average mileage ATF cost per passenger Crew members Rs 225 Rs 47843.50 / KL 180 70% (125-135 occupancy) 2.9625 L/ km Rs 480 2 pilots + 4 airhostess (Rs 6.5 lakhs/100 hours) = Rs 52/ person Capital cost Rs 2.25 Crores/ month as cost of the Plane (Maintenance + Insurance) Assuming 1 flight per day Rs 1466 So overall the Fuel surcharge Cost per seat Rs 480+ Rs1466+ Rs52 = Rs 2008 3) Base Fare : Minimum Base fare of Re 101 which would change based on the days booked prior to Travel

Price Differentiation of Base fare based on day of booking prior to Travel

More than 15 days prior to travel
With other fixed, Base fare would vary 101-501

Within 14 days of Travel
The Base fare could upto reach upto 1500s

With in 7 days of travel
The base fare could reach upto 4500

Promotional Strategy
Communication Objectives-Indigo will be promoting the below three things majorly as part of its advertising programme-On-time performance , Affordable fares and Hassle free passenger experience.

Advertisement Strategy
y Hoardings at airports with focus on Best on time y y y y

performance Advertisement through social networking mediumFacebook,Twitter,YouTube etc Collaboration with Multiplexes in major cities to promote the airline and its special offers Advertisement hoardings in multi-storeyed buildings and offices Advertisements in magazines targetting Urban population

Advertisement Strategy contd..
y Sponsering fashion shows, talent hunts, New Year y

y y y

parties etc Collaboration with consumer banks, credit card companies, hotels, ticketing websites to promote special offers, discounts and cash back Giving IndiGo promotion a local flavour by promoting in regional languages in respective sectors Sending special offer details to frequent fliers by sms, email etc Targeting foreigners in Tourist circuits

Advertisement through Social Media

The IndiGo Advantage
y Multiple Short haul point to point flights y Using only one type of aircraft to minimize y y y y

Maintenance overheads Lean Operating Strategy to maximize efficiency Minimum turn around time, keeping Aircraft in air for most of the time Employee welfare and resultant loyalty Making Low budget flying a pleasant experience

References
y IndiGo Airline - www.goindigo.com y Interglobe www.interglobe.com y India Ministry of Civil Aviation - http://civilaviation.nic.in y India Directorate of Civil Aviation - http://dgca.nic.in y Airport Authority of India - www.airportsindia.org.in y Wikipedia www.wikipedia.org y Bureau of Civil Aviation Security (India)

http://bcasindia.gov.in y http://www.ibef.org/industry/aviation.aspx y Outlook Magazine y Indian Railways www.indianrail.gov.in

Thank You

-Priyank -Purnendu -Rachna -Rahul Raj -Rahul Jain

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