Strategic Management

INDIGO AIRLINES

Europe Asia Business School Strategic Management
Your Tutor's Name: Prof. Bella Butler

Full name of the student: Deepak Namram Full name of the student: Gargi Kumari Full name of the student: Sujata Sah

Student number: 09104 Student number: 09105 Student number: 09121

Due Date: 10th Sep 2009 Date submitted: 10th Sep 2009 We declare the attached assignment is our own work and has not previously been submitted, in whole or in part, for assessment in any other unit. We have retained a copy of this assignment for my own records. Signed Signed Signed ___________________________________________________ ___________________________________________________ ___________________________________________________

Europe Asia Business School

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Strategic Management

INDIGO AIRLINES

INDEX
Executive Summary Introduction External Environment Analysis
Airline Industry Attractiveness Porter’s Five Forces Opportunities Threats

3 4 6
6 6 11 12

Internal Environment Analysis
Tangible Resources Intangible Resources Criteria of Sustainable Competitive Advantage Value Chain Analysis Strength Weakness

13
13 13 15 16 17 17

TOWS Feasible alternatives Final Recommendation APPENDIX A APPENDIX B BIBLIOGRAPHY

18 19 20 21 24 25

Europe Asia Business School

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we have suggested recommendations that can be adopted by IndiGo to sustain its competitive advantage by utilizing its cost leadership strategy. Also. It has been able to achieve its break even within two years of its launch and has reported gross revenue of 60 crores this year. IndiGo being a new entrant has managed to become a cost leader in its sector. However. Value Chain analysis. TOWS matrix etc. Limitations Due to confidentiality clause and corporate policies of the company. Europe Asia Business School 3 . Findings IndiGo airlines entered the low cost carrier market in aviation industry in 2006. Methods To understand the important factors responsible for the formulation of corporate strategy. Despite the decline in the aviation industry and global economic slowdown. internal environment analysis is conducted for IndiGo Airlines. accurate financial data could not be obtained for IndiGo Airlines. With the help of this comprehensive study. IndiGo has accelerated its growth rate. we have utilized Strategic Management tools like Porter’s Five Forces model.Strategic Management INDIGO AIRLINES Executive Summary Objectives The objective of this report is to study the external environment of the Aviation Industry in India. most recent and reliable data sources have been referenced for the analysis of this case. Subsequently.

the booming opportunities incited players to expand capacity but on the other hand. 1 http://www. precise. In 2006. The airline currently operates 120 daily flights with a fleet of nineteen brand new Airbus A320 aircraft and flies to 17 destinations. a renowned travel corporation. that make sense.interglobe. lounges. The IndiGo team uses all of these resources to design processes and rules that are safe and simple. Thus the low-cost players found it difficult to maintain their commitment. Below graph shows the gradual growth in the domestic air traffic: The growth in the aviation industry looked promising and hence attracted many low cost carriers like SpiceJet. Besides. Some of the factors that have resulted in higher demand for air transport in India include the growing purchasing power of middle class. Some players sought refuge in mergers. It was awarded the title of ‘Best Domestic Low Cost Carrier’ in India for 2008. IndiGo plans to serve approximately 30 Indian cities by 2010. IndiGo resorted to measures like outsourcing and having a homogeneous fleet. increased the operational costs. It started its operations on August 4. IndiGo continued to fly high. etc. 2006.Strategic Management INDIGO AIRLINES Introduction India is one of the fastest growing aviation industries in the world. On one hand. InterGlobe Enterprises. IndiGo is the latest entrant as a low cost carrier in the aviation industry of India. However. These efforts helped IndiGo to offer its passengers low air fares. rising fuel costs and taxation rates. seamless. add free refreshments and beverages on-board. is the owner of IndiGo. the private carriers accounted for around 75% share of the domestic aviation market. No frills such as free food/drinks. In its endeavour to consistently maintain low costs. they were compelled to increase prices.com/ig-aviation. low airfares offered by low cost carriers and the growth of the tourism industry in India. the deregulation policy has also played a major role to encourage private players in the aviation industry.1 Below are the key factors of the business model of IndiGo airlines: • • • A single passenger class. gimmick-free customer experience at fares that are always affordable. GoAir and IndiGo after the success of Air Deccan in 2003 [Exhibit 1]. In addition to the liberalization policy. Because of the introduction of liberalization policy in the Indian aviation sector. the industry has witnessed a vast difference with the entry of the privately owned full service airlines and low cost carriers. which in turn ensures a uniquely smooth. Single type of airplane to reduce training and service cost. amidst this aviation turmoil. with a fleet of approximately 40 A320s. and that cut waste and hassles. there was significant increase in the number of domestic air travel passengers. In their urge to survive. whereas some survived by modifying their business model.aspx Europe Asia Business School 4 .

we will use the Porter’s Five Forces model. competition among the existing players and the feasible alternatives in aviation industry. SWOT analysis of the company will help us understand the current positioning of the company based on the analysis of external and internal environments. increasing domestic traffic. Thus. economic downturn etc will lead us to the external influences that affect the aviation industry of India. Hence. power of buyers and suppliers. using the external environment study.Strategic Management INDIGO AIRLINES • • • Emphasis on direct sale of ticket through Internet to avoid fee and commissions paid to travel agents. Employees working in multiple roles. This will be useful in gaining insight about the entry barriers. Further. we can come to know about the opportunities and threats for IndiGo airlines. Also. To know about the industry attractiveness of aviation and the factors that helped IndiGo enter this market. we will analyse what strategies IndiGo followed to enter the aviation industry. the analysis of government policies. competitor’s strategies and other variables like fuel prices. In this report. Europe Asia Business School 5 . This will help identify the strengths and weaknesses of the company. Unbundling of ancillary charges to make the headline fare lower. we will discuss how IndiGo implemented the low cost strategy to gain competitive advantage and provide recommendations to sustain its competitive position in the long-term. we will study the criteria for sustainable competitive advantage as well as the Value Chain Analysis. the consequences and influence of the all factors of SWOT taken together will aid in the formulation of alternative strategic actions that IndiGo may consider to sustain its competitive advantage. For internal analysis.

The switching cost is not high. many domestic airlines too will be entitled to fly overseas by using unutilised bilateral entitlements to Indian carriers. with high earning potential.Strategic Management INDIGO AIRLINES External Analysis Airline Industry Attractiveness 1. 2. Threat of New Entrants • Product differentiation: In low cost carriers. Attraction of foreign shores: After five years of domestic operations. 4. • Switching cost: 1. Customers can easily choose other low cost carriers. there is not much differentiation in the basic service that is being provided to the customers. Differentiation can only be achieved by Value Added Services. like J. 5. The switching cost of an airline company to other business/industry is high as the exit cost is high. Hence this argument works in favour of IndiGo. especially due to the open sky policy between India and the SAARC countries and the increase in bilateral entitlements with European countries. and Sir Richard Branson and Dr. Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident Indian) investment up to 100 per cent is permissible in domestic airlines without any government approval 2. stair-free ramps. Glamour of the airlines: No industry other than film-making industry is as glamorous as the airlines. and “Q-Busters”. Europe Asia Business School 6 . Airline tycoons from the last century. Untapped potential of India's tourism: Tourist arrivals in India are expected to grow exponentially. R. IndiGo provides check-in kiosks. 3. Vijaya Mallya today. India has the highest percentage of people in age group of 20-50 among its 50 million strong middle class. Porter’s Five Forces strategy for Airline Industry 1. have been idolized. Rising income levels and demographic profile: Demographically. Tata and Howard Hughes. and US. D.

nic.Strategic Management INDIGO AIRLINES In aviation industry the major entry barriers can be: • Government regulations: 1. Chairman and at least two –thirds of its Directors are Indian citizens. 5. Private airlines account for around 75 per cent share of the domestic aviation market. 8. foreign equity up to 100 percent is allowed through automatic approvals. In order to overcome the shortfall of aircrafts during the peak seasons.in India Directorate of Civil Aviation . 1. then they can offer their surplus aircrafts in their low season to another airline that is facing peak season.in 3 Europe Asia Business School 7 . 7. Private sector is allowed to operate scheduled and non-scheduled services. 6. Foreign airlines are not permitted to pick up equity. Bureau of Civil Aviation Security (India) – http://bcasindia.Resident Indians (N. For upgrading present airports. Operator should be a citizen of India or a company or a body corporate which is registered in India and whose principal base of business is in India.in. 2 India Ministry of Civil Aviation . 9. Foreign financial institutions and other entities who seek to hold equity in the domestic air transport sector shall not have foreign airlines as their shareholders. 2. 4. If the airline has many aircrafts. The government's open sky policy has encouraged many overseas players to enter the aviation market. venture capital of $10 million or less is enough to launch an airline. Due to liberalisation Indian aviation industry is now dominated by privately owned full-service airlines and lowcost carriers.nic. The representation of the foreign investing institution/entity on the Board of Directors of the company shall not exceed one-third of the total. foreign equity up to 74 percent is allowed through automatic approvals and 100 percent through special permission (from FIPB). For green field airports. the operators must ensure compliance with relevant regulatory requirements stipulated respectively by the Director General of Civil Aviation (DGCA) and the Bureau of Civil Aviation Security (BCAS).R.gov. As regards safety and security arrangements.http://dgca. • Setup costs: Nowadays. Foreign equity participation up to 49 percent and investment by Non.http://civilaviation.I). Overseas Corporate Bodies (OCBs) up to 100% is allowed. airlines can utilize an ACMI lease agreement for the extra aircraft. Aviation was primarily a government owned industry.2 Indian Civil Aviation Policy:3 3. either owned or leased.

ATR-42 but do not meet the requirements to serve the low cost commercial aircraft carriers. U.Bell. there is a lack of dedicated flight Instructors.A. • Resource: The aviation industry in India suffers a shortfall of pilots. to be replaced with more modern aircraft. decadeold aircrafts and poor quality training offered at a price much higher than what is offered by flying schools in USA. petrol. In India. As a result. instead they refine it from imported crude oil.Strategic Management INDIGO AIRLINES 2. Moreover.Dronier. Private airlines hire pilots. finding appropriate labour-force is very costly.S. Canada and Australia.K etc. 3. Airlines can contract employees such as cabin crew. In airline sector. 2. leasing allows the cost to be spread across several years. which is under their control. Fleet Forecast for the India-Region 2006-2011 shows that there will 8 Europe Asia Business School . due to the liberalization of policies by government. At the lease term end.e. kerosene and LPG at way below cost. • Fuel prices: Domestic ATF prices have increased by over 160 per cent from the beginning of 2005 till last year and by over 80 per cent from a year-ago levels. the state owned oil marketing companies (almost 95 per cent of the market is with state owned firms) are forced to sell diesel. With rising crude oil prices. the lease can be renewed or aircraft can be returned. 2. As a result prices of ATF in India are much higher than some of the other Asian countries. Indian institutes provide training with the help of their training partners in the foreign countries like U. foreign and private players often poach workforce of competitors which leads to talent-drain and thus losses. The reasons are: 1. The reason being that in India. Airbus and Boeing. the government is unable to pass on the full impact of this rise to the consumer. get expatriates or retired personnel from the Air Force or PSU airlines in senior management positions. Bargaining Power of Suppliers • Any airlines in general face a duopoly of two major suppliers of aircrafts i. There are other suppliers like Dauphin. An airline company will bear the cost of purchasing an aircraft if it wants to start or expand its fleet. The aspirants can receive Commercial Pilot Licence (CPL) only if they undertake a training abroad. imports are becoming expensive day by day and at the same time. oil companies do not import ATF directly. ticketing and check-in staff members. particularly IndiGo airlines. a cost they are trying to somewhat make up by raising the price of ATF.

Furthermore the players in the particular strategic group do have minimalistic differentiating points. The suppliers are few and thus in better position to bargain as they always finds customers for their aircrafts. Below are the major reasons for the high competition in the lowcost carrier airlines: • Very little scope for differentiation between competitors’ products and services 9 Europe Asia Business School . Due to shortage of commercial aircraft pilots in India the supply of pilots is concentrated.Strategic Management INDIGO AIRLINES be approx. There are only four suppliers for ATF (Aviation Turbine Fuel). The switching cost is minimal since there are multiple alternatives available. hence increasing their power. • • • IndiGo fleet comprise of Airbus-A320 and the switching cost is high due to the limited number of suppliers. Hindustan Petroleum Corporation. • • • • 3. The brand value of suppliers is high due to their less number and results in higher bargaining power for them. suppliers are few and thus in better position to bargain as they always finds customers for their aircrafts. Thus. It is not difficult to move from one airline to another or to switch to a substitute. The airlines also face a threat of forward integration since the suppliers are in close contact and are familiar with the knowhow of the aviation industry. Backward integration from the buyers end is very difficult and next to impossible. 85% growth in the order rate of air carriers [Exhibit 2]. Bargaining Power of Buyers • Buyers in airlines industry are large in number and highly fragmented thus lowering their power . The proof of evidence for high power enjoyed by ATF suppliers lies in the fact that the ATF prices constitute 35-40% of the costs in India compared to 20-25% globally. IOC. • • • 4. Bharat Petroleum and ONGC and since their number is limited. Competitive Rivalry The aviation industry is a highly competitive industry because of which it is difficult to earn high returns in this sector. the buyers have increased and so have the growth opportunities. they possess more power.With the growing Indian economy and increasing low cost carriers.

i.zoomtra. GoAir is looking at 'commoditising air travel' by offering airline seats at marginally higher train prices to all cities in India. quality assured and time efficient product through affordable fares. i. and plans to expand its fleet to 33 aircraft in three years. Go Air operates four A320 aircraft with a single class.Strategic Management INDIGO AIRLINES • • • Aviation is a mature industry with very little growth.com/Airlines/Go-Air. GoAir's business model has been created on the 'punctuality. and supports the low-cost structure. to sustain in this cutthroat competition.4 GoAir Airlines.html http://www. there is no brand loyalty.e. It has a fleet of 6 Boeing 737-800 in single class configuration with 189 seats.html 5 Europe Asia Business School 10 . we can summarize from above data that all the three players are trying to follow cost leadership strategy by bringing down the ticket rates to the minimum possible value. Closest competitor of IndiGo is SpiceJet followed by GoAir [Exhibit 3]. it is clear that. Spice Jet currently flies to 11 destinations. delivering the lowest air fares with the highest consumer value.zoomtra. It has been showcased as “The People's Airline”. Boeing and Airbus.. Hence supplier’s bargaining power is high. affordability and convenience' model. to price sensitive consumers. owned by Wadia Group.5 Thus. each player will have to come up with different strategies to improve the non price factors [Exhibit 3]. Spice Jet’s mission is to become India’s preferred low cost airline. The only way to grow is by stealing away customers from competitors Suppliers of aircrafts are the same. is a low-cost budget airline based in Mumbai. India. Below is brief description about each of them: SpiceJet is a low-cost airline based in New Delhi. The Airline’s theme line is “Experience the Difference” and its objective is to offer its passengers a quality consistent. SpiceJet has chosen a single aircraft type fleet which allows for greater efficiency in maintenance. Its vision is to ensure that flying is no longer confined to business travellers. 180-seat configuration. SpiceJet's new generation fleet of aircraft is backed by cutting edge technology and infrastructure to ensure the highest standards in operating efficiency. Switching cost of customers is high for low cost carriers. India.com/Airlines/Spicejet. However. but is affordable for everyone and thus the tagline ‘flying for everyone’ Spice Jet airways began its operations in May 2005. 4 http://www.e..

many customers use airlines as a status symbol. So in this case. Opportunities • IndiGo airlines have not ventured into the huge air freight market which can contribute a sizeable portion of the revenue.The flight density of IndiGo airlines is limited in domestic market. 2.centreforaviation. The huge untapped international sectors should be explored once IndiGo has a considerable presence in the domestic market. So if we consider IndiGo airlines.1 million by 2010.com Europe Asia Business School 11 . So trains cannot work as a substitute to save time. But this substitute is not very powerful due to the following reasons: 1. Indian domestic traffic will touch 86.phocuswright. threat of substitutes is high as the switching cost between low cost carriers is low. Customers use airline transport as it is convenient and saves travelling time.up from 32.2 million in 20077. • • • • 6 Centre for Asia Pacific Aviation – www.4 million tonnes per annum. IndiGo currently does not have too many long haul aircrafts and as per CAPA study by 2020. the direct substitutes are the other low cost carriers like SpiceJet and GoAir. According to a research conducted by PhoCus. an aviation consulting firm estimates the cargo services of 3. IndiGo airlines should focus on long haul aircrafts both for domestic and international sectors. A study by Centre for Asia Pacific Aviation or CAPA6.Strategic Management INDIGO AIRLINES 5. The chartered flight services still remain an area not exploited by Indian aviation industry and IndiGo airlines can play a major role in tapping the potential in that particular market. Availability of Substitutes The substitute for low cost airline company is the railways. So again. hence there is a big scope to increase the flight frequency [Exhibit 4].com 7 www. Indian Airports are expected to handle more than 100 million passengers. Secondly. trains cannot substitute for prestige.

government has control over fuel prices. Like every other industry. tourism laws.g. recession has hit aviation industry as well. People have cut down on tourism and corporate travels have also been slashed down. The shortage of trained pilots. In aviation industry. FDI policies). • • • Europe Asia Business School 12 . taxes etc.Strategic Management INDIGO AIRLINES Threats • • • ATF (Air Turbine Fuel) prices have increased radically since 2005 [Exhibit 5]. Foreign and private players often poach work-force of competitors. no government restrictions and loss of brand image. Extensive Government Interference can affect the accountability of the organization. This can greatly affect the day to day business in the airline industry. Barriers to exit in aviation industry are high because of high capital investment. foreign investments (e. co-pilots and ground staff is severely limiting the growth prospects of all the airline companies.

Compared to the direct competitors. the other low cost carriers like SpiceJet. • Europe Asia Business School 13 . Capabilities and Core Competencies are the key elements of the Internal Environment. 4. IndiGo has amicable relationship with the other organizations that contribute to the value addition for the service provided to the customers. The resources are tangible and intangible. etc. that is. 2. On time arrivals is the key differentiating factor for IndiGo Airlines. Tangible resources • Aircrafts: The airline currently operates 120 daily flights with a fleet of nineteen brand new Airbus A320 aircraft and flies to 17 destinations. ATF is the complementary product for airplane and it constitutes approximately 35% of the production costs. Jetlite. Human Resources: 1. • • Intangible resources • Brand Equity/Reputation IndiGo is the most reputed low cost carrier due to the following reasons: 1. There have been no instances of distress between IndiGo and its other collaborators. 2. suppliers. Recent example is: IndiGo has roving “check-in counters” where passengers with only cabin baggage can check-in with an IndiGo official with a handheld device. etc. It gives the customers the freedom to carry their own eatables and snacks on board. 3. Social Capital: 1. The labour-force has to be trained and then assigned with tasks to perform after proper evaluation. 2. IndiGo keeps implementing new and innovative ideas to increase the quality of customer service. IndiGo has engaged many Travel web-portals and regional travel agents with incentives like booking commissions. Porter’s five forces model does not cover the importance of complementary product. rather than lining up at the check-in counter. crew members and ground staff. that is. Fuel: 1. No airline can recruit a trainee pilot and directly assign him to fly an airplane carrying around 500 passengers.Strategic Management INDIGO AIRLINES Internal Environment Analysis Resources. IndiGo offers the lowest airfare [Exhibit 7 & 8]. The human resources are the pilots. 2.

IndiGo. 2. While IndiGo flyers can avail up to 25 per cent discount on published room tariff. 10 per cent discount on holiday stay packages and 10 per cent discount on restaurant dining at select Sarovar properties8. cabin attendants. Word of Mouth promotion also works in its favour. is on the lookout for more pilots.” Hence. Advertising using print media like newspapers.business-standard. it is clearly evident from the above statement that IndiGo is optimistic about its long term growth. Employee Relationship: Good Employee Relationship is a key factor to sustain competitive advantage. Hence IndiGo has a remarkable Social Capital. The highlights are: a. While Jet Airways offered a “voluntary retirement scheme” to more than 300 of its • 8 http://www. it is planning to expand its employee strength and at the same time there is no indication of downsizing the current staff. billboards. b. Collaboration with hotels: Mumbai-based hotel chain operator Sarovar Hotels and IndiGo Airlines announced a marketing tie-up for frequent travellers. customer service and airport service agents. Also. both Kingfisher Airlines and Jet Airways have asked their staff to leave.com/india/news/sarovar-hotels-indigo-in-marketing-tie-up/60537/on Europe Asia Business School 14 . but has been covered in news for its low cost strategy implementation. As per the news article published in The Hindu Business Line: “IndiGo officials claimed that they have been seeing a healthy growth in passenger numbers and had no plans to defer delivery of any of the 100 Airbus it has ordered. It may not pay for an advertisement in a newspaper. 3. The following points contribute to the brand awareness of IndiGo: 1. Quoted below are some comparisons about the different approaches implemented by various airlines at the time of recession stated in the same article: “At a time when several domestic airlines are looking to prune their staff strength.Strategic Management INDIGO AIRLINES 3. IndiGo provides several incentives to its employees. etc. • Brand Awareness: IndiGo is a well known Low Cost Carrier in India. The arrangement will allow guests staying at select Sarovar Hotels across 26 destinations in India to avail a 10 per cent discount on their next travel booking with IndiGo. As IndiGo provides better value added services to the customers. the Delhi-based low cost airline.” “In the recent past.

• Four Criteria of Sustainable Competitive Advantage: Resources| Aircraft Human Resources Fuel Brand Equity Social Capital Brand awareness Employee Relationship Valuable Y Y Y Y Y Y Y Rare N N N Y N N N Costly to Imitate Non Substitutable N N N N Y N N Y Y Y Y Y Y Y 9 http://www. In late September. it was also planning to lay off about 1.com/2008/11/11/stories/2008111151850100.Strategic Management INDIGO AIRLINES staff.thehindubusinessline.htm Europe Asia Business School 15 . The above facts show that IndiGo has taken a positive approach while dealing with its loyal employees at the time of economic slowdown.900 of its staff. Kingfisher announced that 300 employees had “parted ways” with the company”9.

Strategic Management INDIGO AIRLINES Value Chain Analysis Europe Asia Business School 16 .

as these can be easily imitated by the competitors.time arrivals. Cost leadership: Successful implementation of low cost strategy.Strategic Management INDIGO AIRLINES Strengths • • • • • • IndiGo has high brand awareness and brand equity. Weaknesses • • • Scope of product differentiation is less. Highly efficient management that ensures high rate of on. Europe Asia Business School 17 . Tie-up with hotels. Continuous innovation to improve on non price factors. Benefits of the innovations implemented by IndiGo to provide better services to the customers are short-lived. Ease of ticket booking for customers. IndiGo is not exploring the untapped domestic air cargo market.

2. value added services. 2. traffic 2. 4. 3. IndiGo can plan to go 2. 6. 4. Effective incentive programmes to avoid talent drain. Sign anti poaching 1. 6. Benefits of the innovations implemented by IndiGo to provide better services to the customers are short-lived. connectivity 6. Hire well trained pilots from other countries as well as retired Air Force personnel. 2. Weaknesses(W) 1. International market as per demand to freight/cargo. Diversify to chartered flight 5. Rising ATF prices Increasing competition Economic slowdown Poaching Government interference Scarcity of trained pilots ST WT of 1. Freight market 1. Tie-up with hotels. 5. 4. 3. Europe Asia Business School 18 . Scope of product differentiation is less. Continuous innovation to improve on non price factors. IndiGo is not present in domestic air cargo market. Development of airport infrastructure Threats(T) 1. Not present in International market Opportunities(O) SO WO 1. 2. Highly efficient management that ensures high rate of ontime arrivals. 4. IndiGo can expand its services 3. as these can be easily imitated by the competitors. Promotion of regional air services. Increase domestic 1. 5. IndiGo has high brand awareness and brand equity. Upgrade to long haul aircrafts 2. Chartered flight services 3. Continuous innovation agreements with competitors. 3. Increase in domestic air destinations for flights international.Strategic Management INDIGO AIRLINES TOWS Strengths(S) 1. Ease of ticket booking for customers. 3. Cost leadership: Successful implementation of low cost strategy.

2009 15 Europe Asia Business School 19 . 14 13 http://infrastructure. Extension Currently.pdf Press Trust of India / New Delhi July 2.g. of these 24 airports would be taken up for city side development through PPP including maintenance and operation of the terminal buildings. Guidelines for granting technical approvals by various agencies involved in setting up of an airport would be provided upfront to provide clarity. Hence it would be a wise option for IndiGo to increase its domestic operations. The `Open Sky' policy encourages the promotion of Regional Airlines.gov. Besides. chartered flight services are an untapped market for IndiGo. As per the reports from an economic survey this year. Bangalore and Hyderabad. Modernisation of the Kolkata and Chennai airports is being undertaken by the AAI. For the non-metro airports AAI is responsible for the airside development. e.in/pdf/brochure_airports.. IndiGo must increase the number of destinations and can start long haul aircrafts.Strategic Management INDIGO AIRLINES Feasible Alternatives 1. All these factors indicate towards a favourable environment for growth in the domestic aviation sector. the freight/cargo market and charted plane service are the areas that can prove to be good potential market for IndiGo. Thus. Scheduled Air Transport (Regional) Services had been introduced. promotion of regional air connectivity10. 2. government has also made plans for the development of airport infrastructure13. However.airportsindia. lower fares to make aviation affordable and remove price monopolies in respect of Aviation Turbine Fuel (ATF). Open Sky policy11 and policy of Greenfield airports12. cargo operations and real estate development14. The Policy aims to have an approval mechanism for setting up of new airports.55%15. In addition to this. it was stated that domestic cargo showed a growth of 14.org. IndiGo has a huge opportunity to expand in both these arenas. IndiGo is concentrating only in domestic passenger flights. Increase domestic operation There are a number of initiatives taken up by government to encourage aviation industry.in 12 11 10 Airport infrastructure has been undertaken through the PPP route in major metro cities like Delhi. To expand air connectivity on Tier II and Tier III cities and to promote regional air connectivity a separate category of permit. Mumbai. 35 airports have been selected for this purpose. Airport Authority of India – www.

Europe Asia Business School 20 . IndiGo can gain competitive advantage over its competitors as the first mover. the other low cost carriers may also venture in this area.Strategic Management INDIGO AIRLINES Final Recommendation As inferred from the above two solution analysis. IndiGo can use extension to freight and chartered services as the next objective for further expansion. we recommend that IndiGo must increase its domestic operations by starting flights connecting to new destinations and long haul flights. Once the above strategy is successful and results in promising revenue growth. So using the cost leadership strategy. As the opportunities are vast for this purpose.

Strategic Management INDIGO AIRLINES APPENDIX A Exhibit 1: Increase in Indian domestic air traffic 16 Exhibit 2: Expected growth of fleets in India17 16 17 Sources: Airports Authority of India Source: AS MRO Initiative 2006 Europe Asia Business School 21 .

PL Research Europe Asia Business School 22 .Strategic Management INDIGO AIRLINES Exhibit 3: Market share of Low Cost Carriers in India in Jan 200918 Exhibit 4: Air Passenger revenue percentage growth19 18 19 Source: Indian Civil Aviation Ministry : Source: CMIE.

Strategic Management INDIGO AIRLINES Exhibit 5: Rising ATF prices Europe Asia Business School 23 .

Strategic Management INDIGO AIRLINES APPENDIX B Exhibit 6: Comparison of air fares Exhibit 7: Comparison of air fares Europe Asia Business School 24 .

nic.nic.cleartrip.business-standard.Strategic Management INDIGO AIRLINES BIBLIOGRAPHY Websites 1.org.centreforaviation.com Europe Asia Business School 25 .com 2.in/ 4. www. India Ministry of Civil Aviation .http://civilaviation.in 9.in 3.in 11.thehindubusinessline.com 7.in/ 6. Airport Authority of India .com 10. www.infrstructure. www. www.gov.gov. www.http://dgca.nic.indigoairtickets. India Directorate of Civil Aviation . Bureau of Civil Aviation Security (India) – http://bcasindia. www.in/ 5.civilaviation.com 8. www.airportsindia. Centre for Asia Pacific Aviation – www.interglobe.com 12.www.

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