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Marketing Plan of Indigo Airlines
Marketing Plan of Indigo Airlines
The aviation sector is one of the major economic drivers for prosperity, development and
employment in a country. The rapidly expanding aviation sector in India handles about 2.5
billion passengers across the world in a year. Currently, India is the ninth largest civil
aviation market in the world. India is expected to be amongst the top five nations in the world
in the next 10 years.
But the Indian Aviation industry has been going through a turbulent phase over the past
several years facing multiple headwinds. With the government allowing 49% of FDI in civil
aviation recently there is going to be a lot of happenings in this particular sector.
So we as a group decided to focus upon one of the major domestic players in our civil
aviation industry i.e. IndiGo Airlines
Group C6
Group Members:
Data From FEB-2012. KFA has lost major part of their market share since
then.
CORPORATE OBJECTIVE:
We believe that we offer the lowest fares by staying focused, which keeps our costs down
without cutting corners or compromising on things that matter.
IndiGo is built for people with things to do, places to be, people to see - who don't want to
waste time, money or energy in the process. By minimizing the cost/time/tension of air travel,
IndiGo opens up a country full of opportunities. With IndiGo, you've got a billion reasons to
fly! IndiGo incorporates the best hardware, software, interface design & personnel from
around the world. 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. IndiGo focuses on doing one thing, and doing it well.
MARKETING OBJECTIVES:
IndiGo’s objective is to maintain the highest market share amongst the Indian Carriers.
IndiGos current market share is 27 %. Having clocked a profit of over Rs66 Cr in the first
fiscal, Indigo aims to achieve a profit of around 340 Cr by year end.
The passenger traffic has grown at the rate of 17-18 per cent in the last few years. According
to an assessment of the overall outlook of the sector, the fleet of the commercial airlines is
expected to touch approximately 1,000 aircraft in 2020.
The air transport (including air freight) in India has attracted foreign direct investment (FDI)
worth US$ 438.39 million from April 2000 to June 2012, as per data released by Department
of Industrial Policy and Promotion (DIPP). Foreign airlines carry 82 per cent of India’s air
cargo traffic, which is projected to grow at 10-12 per cent rate over the next five years.
Time Frame
Having clocked a profit of over Rs66 Cr in the first fiscal, Indigo aims to achieve a profit of
around 340 Cr by year end.
With a current marketing share of 27%, IndiGo aims to improve and keep growing so as to
maintain its position at the top in the Indian market. It looks to achieve a market share of
around 35 % in the next three years.
Customer retention
Customer satisfaction and retention is central to IndiGo’s success.
IndiGo incorporates the best hardware, software, interface design & personnel from around
the world. 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. IndiGo focuses on doing one thing, and doing it well.
Situation Analysis:
MARKET DEFINITION
The airlines industry comprises passenger air transportation, including both scheduled and
chartered, but excludes air freight transport.
Industry volumes are defined as the total number of revenue passengers enplaned (departures)
at all airports within the country or region, excluding transit passengers who arrive and depart
on the same flight code.
5. Competitive Rivalry
The aviation industry is a highly competitive industry because of which it is difficult to earn
high returns in this sector. Below are the major reasons for the high competition in the low-
cost carrier airline:
• Aviation is a mature industry with very little growth. The only way to grow is by
stealing away customers from competitors
• Suppliers of aircrafts are the same, i.e., Boeing and Airbus. Hence supplier’s
bargaining power is high.
• Switching cost of customers is high for low cost carriers, i.e., there is no brand loyalty
.Closest competitor of IndiGo is SpiceJet followed by GoAir. Below is brief
description about each of them:
SpiceJet is a low-cost airline based in New Delhi, India. Spice Jet’s mission is to become
India’s preferred low cost airline, delivering the lowest air fares with the highest consumer
value, to price sensitive consumers. Its vision is to ensure that flying is no longer confined to
business travellers, but is affordable for everyone and thus the tagline ‘flying for everyone’.
Spice Jet airways began its operations in May 2005. SpiceJet has chosen a single aircraft
type fleet which allows for greater efficiency in maintenance, and supports the low-cost
structure. It has a fleet of 6 Boeing 737-800 in single class configuration with 189 seats.
SpiceJet's new generation fleet of aircraft is backed by cutting edge technology and
infrastructure to ensure the highest standards in operating efficiency. Spice Jet currently flies
to 11 destinations.
GoAir Airlines owned by Wadia Group, is a low-cost budget airline based in Mumbai, India.
It has been showcased as “The People's Airline”. GoAir is looking at' commoditising air
travel' by offering airline seats at marginally higher train prices to all cities in India. The
Airline’s theme line is “Experience the Difference” and its objective is to offer its passengers
a quality consistent, quality assured and time efficient product through affordable fares.
GoAir's business model has been created on the 'punctuality, affordability and convenience'
model. Go Air operates four A320 aircraft with a single class, 180-seat configuration,
andplans to expand its fleet to 33 aircraft in three years.
Thus, 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.
However, it is clear that, to sustain in this cutthroat competition, each player will have to
come up with different strategies to improve the non price factors.
• Market Size
• On 17 August 2012, IndiGo made history by becoming the first low cost carrier in
India to become the largest airline in India in terms of market share (27%), dethroning
Jet Airways, which had held the position for many years. It has achieved that feat just
6 years after it began operations.
Growth
• By early 2012, IndiGo had taken the delivery of its 50th aircraft in less than 6 years.
IndiGo is known to have placed the largest order in commercial aviation history
during 2011, when Airbus won the US$ 15 billion deal for 180 aircraft. This deal
pushed up the percentage of Airbus aircraft in India to 73%.
• In 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 the low cost model,
buying only one type of aircraft and keeping operational costs as low as possible
along with heavy emphasis on punctuality are said to be some of the reasons for its
success even when the airline industry in India is currently going through a bad patch.
IndiGo focuses on adding a new plane every six weeks and sometimes even faster.
However, this rapid expansion had led to a scathing report by the DGCA in December
2011, which highlighted problems in the airline which could impact safety due to
rapid expansion.
• Sri Lankan Engineering, a subsidiary of the Sri Lankan flag carrier SriLankan
Airlines recently won the contract of performing heavy maintenance checks on 26 of
the 50 Airbus A320-200 operated by IndiGo. Sri Lankan has been receiving contracts
for the past 4 years to perform maintenance checks on IndiGo aircraft. IndiGo is
believed to outsource its aircraft to SriLankan because of the unbearable tax imposed
on the local MRO providers making them unfavourable when compared to the MRO
providers in Sri Lanka.
Consumer Analysis
Indigo is a low-cost private airline in India. Since commencing operations in August 2006, it
has established itself as one of India's leading airlines using its model of efficient, low-cost
operations and by attracting customers with low fares. IndiGo is the largest low cost carrier in
India and is India's largest carrier by market share as of August 2012.
India has seen rapid GDP growth for the past decade. This has led to the emergence of
burgeoning middle class which aspires to air travel. Indigo primarily aims to attract these
customers, as it says on its website, ‘For the individual on the Go, who values time and on-
timeliness’. Being a low-cost carrier, all of IndiGo's flights have no Business class or First
class sections. It offers only Economy class seating.
The aviation sector overall provides the following services:
IndiGo operates to 33 destinations in India and abroad with 373 flights each day.
Unlike most low cost carriers, IndiGo uses a hub and spoke model used by full service
airlines where the airline flights to different destinations are routed through its hub.
By early 2012, IndiGo had taken the delivery of its 50th aircraft in less than 6 years.
IndiGo is known to have placed the largest order in commercial aviation history
during 2011, when Airbus won the US$ 15 billion deal for 180 aircraft. This deal
pushed up the percentage of Airbus aircraft in India to 73%.
In 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. On 17 August 2012, IndiGo made history by
becoming the first low cost carrier in India to become the largest airline in India in
terms of market share (27%), dethroning Jet Airways, which had held the position for
many years. It has achieved that feat just 6 years after it began operations.
IndiGo has Identified some of the circuits with demand for air travel and has been
expanding aggressively. They are
Indigo
POD POP
Other Airlines
Value proposition of IndiGo: It consists of the whole cluster of the benefit the company
promises to deliver. It is more than the core positioning of the offering. Some of the benefits
indigo promises to offer are:
a) Safety: With its experienced pilots and crew members indigo promises to deliver safety.
Moreover all its flight are new and well maintained. One type of airplane - brand-new Airbus
A320s
b) Price: Indigo offers cheap flights as compared to its competitors. One type of fare – low.
c) Services: It offers to deliver a world class service with making the journey hassle free and
smooth. One type of customer service – professional.
Mission Statement: To be the best Airline in India by providing the following values
to the customer:
-Affordable Fares
- On-time performance
- Hassle free Service
Strategies
Market Strategy
a) Be visible -go all out to project yourself as the Future Market
Leader
b) Go Local - Connect with the Middle class
c) Focus on your Core Competencies and market them
d) Aim to compete with Railways in the long run
Pricing Strategy
Promotional Strategy
Communication Objective
Indigo will be promoting the below three things majorly as part of its advertising
programme-
Profits
IndiGo is an anomaly in the Indian market – it is the only profitable domestic airline
financial year ending 31-Mar-2012. The carrier is however, like its peers, feeling the
pressure in a tough operating environment. The carrier would see a decline in FY2012
profits, with the results substantially impacted by high fuel costs.
Margins were under huge pressure because average price of fuel is now higher than
what it was in 2009. There has been a growth in revenue and there is high probability
of business turning profitable at end of the year. It will be much smaller profit than
the previous year. The carrier reported an 18% increase in profit to INR6.5 billion
(USD130 million) in FY2011 but expects the FY2012 result to be a "fraction" of this
figure.
Value Chain
With the recent advent of the government to allow FDI in aviation, Indigo could look
to get new technology and the investment it requires to expand rapidly from Foreign
players like Qatar Airways, Etihad Airways, or NorthSouth Wales Airlines.