INDIGO

INTRODUCTION
IndiGo is an Indian airline company headquartered at Gurgaon, India. It is a low cost carrier and
the largest airline in India with a market share of 31.7% as of May 2014. IndiGo is one of the
fastest growing low cost carriers in the world. With its fleet of 79 new Airbus A320 aircraft, the
airline offers 516 daily flights connecting to 36 destinations. Indigo is one of the fastest growing
aviation industries in the world. Because of the introduction of liberalization policy in the Indian
aviation sector, the industry has witnessed difference with the entry of the privately owned full
service airlines and low cost carriers. In 2006, the private carriers accounted for around 75%
share of the domestic aviation market. Besides, there was significant increase in the number of
domestic air travel passengers. Some of the factors that have resulted in higher demand for air
transport in Indian clued the growing purchasing power of middle class, low airfares offered by
low cost carriers and the growth of the tourism industry in India. In addition to the liberalization
policy, the deregulation policy has also played a major role to encourage private players in the
aviation industry. 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 Spice
Jet, Go Air and IndiGo after the success of Air Deccan in 2003 .On one hand, the booming
opportunities incited players to expand capacity but on the other hand, rising fuel costs and
taxation rates, increased the operational costs. Thus the low-cost players found it difficult to
maintain their commitment. In their urge to survive, they were compelled to increase prices, add
free refreshments and beverages on-board, etc. Some players sought refuge in mergers, whereas
some survived by modifying their business model. However, amidst this aviation turmoil, IndiGo
continued to fly high. In its endeavour to consistently maintain low costs, IndiGo resorted to
measures like outsourcing and having homogeneous fleet. These efforts helped IndiGo to offer
its passengers low air fares. Indigo is the latest entrant as a low cost carrier in the aviation
industry of India. It started its operations on August 4, 2006. InterGlobe Enterprises, a renowned
travel corporation, is the owner of IndiGo. The IndiGo team uses all of these resources to design
processes and rules that are safe and simple, that make sense, and that cut waste and hassles,
which in turn ensures a uniquely smooth, seamless, precise, gimmick-free customer experience
at fares that are always affordable. It was awarded the title of Best Domestic Low Cost Carrier
In India for 2008. The airline currently operates 120 daily flights with a fleet of nineteen brand
new Airbus A320 aircraft and flies to 17 destinations. IndiGo plans to serve approximately
30Indian cities by 2010, with a fleet of approximately 40 A320s.
Below are the key factors of the business model of IndiGo airlines:
A single passenger class.
Single type of airplane to reduce training and service cost.
No frills such as free food/drinks, lounges.
Emphasis on direct sale of ticket through Internet to avoid fee and commissions paid to
travel agents.
Employees working in multiple roles.

ORIGIN
IndiGo was set up in early 2006 by Rahul Bhatia of InterGlobe Enterprises and Rakesh S
Gangwal, a United States-based NRI. InterGlobe holds 51.12% stake in IndiGo and 48% is held
by Gangwal's Virginia-based company Caelum Investments. IndiGo placed a firm order for 100
Airbus A320-200 aircraft in June 2005 with plans to commence operations in mid-2006. IndiGo
took delivery of its first Airbus A320-200 aircraft on 28 July 2006, nearly one year after placing
the order, and commenced operations on 4 August 2006 with a service from New Delhi
to Imphal via Guwahati. By the end of 2006, the airline had six aircraft. Nine more aircraft were
acquired in 2007 taking the total to 15. By December 2010, IndiGo replaced the state run flag
carrier Air India as the top third airline in India. It already had 17.3% of the market share,
behind Kingfisher Airlines and Jet Airways. By early 2012, IndiGo had taken the delivery of its
50th aircraft in less than six years. IndiGo is known to have placed the largest order in
commercial aviation history during 2011 at that time, when Airbus won the US$15 billion deal
for 180 aircraft. This deal pushed up the percentage of Airbus aircraft in India to 73%.
By February 2012, IndiGo was expanding rapidly and was making solid profits, the only airline
in India to do so. It had replaced Kingfisher as the second largest airline in India in terms of
market share. IndiGo's strong adherence to a low-cost model, buying only one type of aircraft
and keeping operational costs as low as possible along with an emphasis on punctuality are said
to be some of the reasons for its success even when the airline industry in India was going
through a bad patch. IndiGo focuses on adding a new plane every six weeks and sometimes even
faster. However, this rapid expansion led to a scathing report by the DGCA in December 2011,
which highlighted problems resulting from this expansion in the airline that could impact
safety. On 17 August 2012, IndiGo became the largest airline in India in terms of market share
(27%), which is more than one-fourth of total market share of all the Indian airlines combined, in
the process dethroning the full-service carrier Jet Airways, which had held that position for many
years. The airline had reached the position just six years after operations commenced.
In January 2013, the Centre for Asia Pacific Aviation announced that, following Indonesian
airline Lion Air, IndiGo was the second fastest growing low-cost carrier in the continent. In the
same month, IndiGo became India's first airline to take the delivery of the Airbus A320-200
aircraft equipped with sharklets. Aditya Ghosh, IndiGo's president said that this move would
help them reduce fuel burn. In February 2013, following the civil aviation ministry announcing
that they would be allowing IndiGo to take the delivery of only five aircraft that year, reports
suggested that the airline was in plans to introduce low-cost regional flights by setting up a
subsidiary. However, Aditya Ghosh, IndiGo's president said that all such reports were untrue and
IndiGo was actually in plans to seek permission from the ministry to acquire four more aircraft,
therefore taking the delivery of nine aircraft in 2013. In August 2013, the Centre for Asia Pacific
Aviation ranked IndiGo amongst the 10 biggest low-cost carriers in the world.



MISSION
To provide quality and reliable air travel facilities to the young, price conscious, first time
travelers.


VISION
To be Indias largest and fastest growing airline through three things: affordable fares, on-time
performance and hassle-free travel experience.







SWOT ANALYSIS

SWOT Analysis
Strength
1. Strong backing Promoters and is one of the largest low cost carriers in India
2. Only LCC to make consistent profits
3. It has one of the major airlines in India in terms of market share
4. LCC which has entered international markets has boosted its brand value
5. Good advertising and marketing strategies have increased its brand recall
Weakness
1.Not on too many routes as compared to competitors
2. Still has to establish itself on international destinations
Opportunity
1. Opening up of International routes
2. Largest Marketshare among LCCs in Indian Market
3. Middle Class taking to the skies
Threats
1. Plenty of new LCCs to compete with
2. Rising Labour costs and changing govt policies
3. Rising Fuel Costs


PRODUCTS AND SERVICES OFFERED BY INDIGO

In Flight Services

To keep fares always affordable, IndiGo has designed -
A clean, comfortable and reliable airline without costly frills that put upward pressure on
fares
An assortment of vegetarian/non-vegetarian sandwiches, flavored cashew nuts, cookies,
soft drinks and juices for sale onboard.
Drinking water is provided free of charge on all its flights to all customers.
Food can also be carried on board, and the allowed food items include: cold snacks, non-
alcoholic drinks, snack bars and biscuits.
For the convenience of customers, messy, oily or smelly food items are not allowed
onboard.

Product Core
Transportation Supplementary
Check in
Food on board
Connecting flight
Complementary gifts
In-flight entertainment
Frequent flier programs Augmented
Online booking
Variety of meal options
Pick up and drop service
Mobile ticketing





External Analysis Airline Industry Attractiveness
Foreign equity allowed: Foreign equity up to 49 per cent and NRI (Non-Resident Indian)
investment up to 100per cent is permissible in domestic airlines without any government
approval
Attraction of foreign shores: After five years of domestic operations, many domestic
airlines too will be entitled to fly overseas by using unutilized bilateral entitlements to
Indian carriers.
Rising income levels and demographic profile: Demographically, India has the highest
percentage of people in age group of 20-50among its 50 million strong middle class, with
high earning potential.
Untapped potential of India's tourism: Tourist arrivals in India are expected to grow
exponentially, especially due to the open sky policy between India and the SAARC
countries and the increase in bilateral entitlements with European countries, and US.
Glamour of the airlines: No industry other than film-making industry is as glamorous as
the airlines. Airline tycoons from the last century, like J. R. D. Tata and Howard Hughes,
and Sir Richard Branson and Rd. Vijay Mallya today, have been idolized


STP
Segment- Cost Conscious Passengers
Target Group - Lower Middle Class / Middle Class
Positioning - Low Cost No Frills

Awards and achievements
IndiGo has won the following awards:
Best LCC by the Airline Passengers Association of India (2007)
Best LCC at the Galileo Express Travel Awards (2008).
CNBC Awaazs Travel Award for best low cost airline (2009)









ORGANISATIONAL CHART



CEO
Aditya Ghosh
MoveIndiGo @ InterGlobe Enterpri...
CFO
Riyaz Peermohammed
Finance Planning &
Analy...
Vineet Mittal
Treasurer
Krishan Bhargava
Airport Operations
Alphonso Dass Sales
Sanjay Kumar
Flight Safety
Dhruv Rebbapragada
Administration
Shalini Singh
Ifly
Summi Sharma
Customer Services & Oper...
Sanjeev Ramdas
Corporate Affairs
Vikram Chona
Engineering
S.C. Gupta
Flight Operations
Ashim Mittra
Flight Operations
Saleem Zaheer
Human Resources
Sukhjit Pasricha
Information Technology
Ramandeep Virdi
Inflight Services
Suman Chopra
Operations Control & Dis...
Sunita Srivastava
KEY FACTS
Market share of 28.6%
On-time performance of 86.5%
IndiGo stands for three things: on-time performance, affordable fares and hassle-free
travel experience
First domestic low-cost airline to have CAT III compliant pilots
Several industry first initiatives like web check-in, mobile bookings, queue busters, step
less boarding ramps and air-conditioned tarmac coaches

P.E.S.T ANALYSIS

Political
Open Sky Policy/Deregulation
Low Entry Barriers
FDI Limits
International Travel Restrict

Technological
Modernized Airports
Greenfield Airports
Video Conferencing/VOIP

Economic
Growing Middle Class Income
Consistent GDP Growth
Hike in Average Income
Growth in Tourism
Rising ATF Price

Socio-Cultural
Growing Middle Class
Domestic Leisure Travel
Foreign Tourist
Status Symbol
Security Issues & Terrorism
PROBLEMS FACED

Stiff competition from established LCC players AirAsia, Air Arabia and home-grown
Air India Express on the same routes.

Large network carriers have built their fortunes on carrying onward traffic from their
hubs to dozens of cities around the world. IndiGo does not have this luxury and hence
will never get the passengers who want to fly onward to say Europe, Africa or Australia.

Infrastructure remains a continuing challenge and potentially is the critical restraint upon
the growth of Indias civil aviation

Various DGCA actions impose frustrating operational and regulatory barriers

Financial distress is also considered as one of the problems of indigo airlines.