BBA (AVIATION, HOSPITALITY, TRAVEL & TOURISM MANAGEMENT)

FYLYWHEEL, AVIATION ACADEMY, NAGPUR

SESSION 2020-2021

A PROJECT REPORT
ON
“INDIGO AIRLINE”
-------------------- Submitted TO ----------------------

YASHWANTRAO CHAVAN MAHARASHTRA OPEN UNIVERSITY

SCHOOL OF COMMERCE AND MANAGEMENT,

NASHIK.

--------------------------------------------------------------------------------

In Partial fulfillment of the Requirement for the award of the degree

Bachelor Business Administration (BBA)

Aviation, Hospitality and Travel & Tourism Management
Submitted by

Mr. Prateek Wagare

PRN No. 2017017000158231

____________________________________________________________________

Under The Guidance of

Mrs. NEHA DUBEY

Through
The Co-ordinator
Study Center code-44357
 BBA (AVIATION, HOSPITALITY, TRAVEL & TOURISM MANAGEMENT)FYLYWHEEL,
AVIATION ACADEMY, NAGPUR
SESSION 2020-2021

CERTIFICATE

This is Certificated that “ Prateek Wagare” has submitted the project report titled
‘Indigo Airlines ’ towards partial fulfillment of Bachelors of Business Administration
degree examination .This has not been submitted for any other examination and does not
perform part of any other course undergone by the candidate.

it is further certificate that he ingeniously completed his project as prescribed by

Yashwantrao Chavan Maharashtra Open University, School of Commerce And
Management, Nashik

Mrs. NEHA DUBEY Ms. SunainaShrivastava

(PROJECT GUIDE) (CENTER HEAD)
PLACE : NAGPUR

DATE :
 BBA (AVIATION, HOSPITALITY, TRAVEL & TOURISM MANAGEMENT)FYLYWHEEL,
AVIATION ACADEMY, NAGPUR
SESSION 2020-2021

DECLARATION

I hereby declare that, the work contained in this project which is titled as Indigo Airlines has been
done by me the work has not been submitted to other institute for any other Degree / Diploma. I have
followed the guidelines provided by the Institute preparing the Project Report.

I have confirmed to the norms and guidelines on given in the ethical code of conduct of the institute.

Student Name & Signature

(Prateek Wagare)

PLACE : NAGPUR

DATE :
 BBA (AVIATION, HOSPITALITY, TRAVEL & TOURISM MANAGEMENT)FYLYWHEEL,
AVIATION ACADEMY, NAGPUR
SESSION 2020-2021

ACKNOWLEDGEMENT
With immense pride and sense of gratitude. I take this golden opportunity to express my sincere regards
to Ms.Sunaina Shrivastava, Centre Head Flywheel Aviation Academy, Nagpur.

I am extremely Thank to my project guide Mrs. NEHA DUBEY for his guideline throughout the
project I render my sincere regards to her for giving me outstanding guidance, enthusiastic suggestions
and invaluable encouragement which helped me in the completion of the project.

I will pass in my duty if I do thank the non-teaching staff of the college for their co-operation. I would
like to thank those who helped me in making the project complete and successful.

Student Name & Signature

(Prateek Wagare)

PLACE : NAGPUR

DATE :
 ABSTRACT

The current airline industry of India has passed through so many changes like the
standardization of airports, emergence of low cost carriers, privatization of airline industry in
India and increase in the affordability of airline service among Indians. The present study is an
attempt to analyze the operating efficiency of two scheduled domestic airlines i.e. Air India
and Indigo Airlines. The study is based on secondary data collected from the Profit and Loss
Ac and Balance Sheet associated with schedules, annexure available in the published annual
reports of airlines and Capitaline data base. The data have been collected for the past twelve
years ranging from 2004-05 to 2015-16 and compiled into tables and analyzed with the help of
Ratio Analysis, Mean, Standard Deviation, Co-efficient of Variation and Compound Annual
Growth Rate. It has been found in the present that the national carrier i.e. Air India could not
earn profits during the entire study period. The result conducted on the expenses ratio and
profitability ratio depicts that the operating efficiency as well as profitability of Air India has
been poor during the study period. On the other hand, the financial performance of private
carrier i.e. Indigo Airlines has been good as compared to Air India which is clearly depicted in
the ratio analysis.

In this report, we will analyze what strategies IndiGo followed to enter the aviation industry.
Also, 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.
To know about the industry attractiveness of aviation and the factors that helped IndiGo enter
this market, we will use the Porter’s Five Forces model. This will be useful in gaining insight
about the entry barriers, power of buyers and suppliers, 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. For internal analysis, we will study the criteria for sustainable
competitive advantage as well as the Value Chain Analysis. This will help identify the
strengths and weaknesses of the company. Further, the analysis of government policies,
competitor’s strategies and other variables like fuel prices, increasing domestic traffic,
economic downturn etc will lead us to the external influences that affect the aviation industry
of India. Hence, using the external environment study, we can come to know about the
opportunities and threats for IndiGo airlines.
 INDEX

SR.NO CONTENTS PAGE.NO

1 INTRODUCTION 1-14
1.1 Ownership and structure
1.2 Threat of Slack
1.3 Threat of Substitution.
1.4 Market Share of Indigo
1.5 Growth part of Indigo Airlines
1.6 Load Factor Increses
2. RATIONALE 15
3 OBJECTIVES 16
3.1 Systematic Reviews and Meta- Analysis
3.2 Contribution
4. HYPOTHESIS 24
5. RESEARCH METHODOLOGY 25
5.1 The Review relied on secondary Research
5.2 Record identify
6. EXPECTED CONTRIBUTION 26
7. DATA COLLECTION AND DATA ANALYSIS 29
7.1 Serves Design and details
7.2 Characteristics and Representativeness
7.6 A Research Agenda
8. FINDING AND CONCLUSION 33
9. RECOMMANDATION 34
10. ANNEXURE 37
11. BIBLIOGRAPHY 38
 INTRODUCTION

IndiGo is an Indian low-cost airline headquartered in Gurgaon, Haryana, India. It is the largest airline in
India by passengers’ carried and fleet size, with a 59.24% domestic market share as of August 2020. It is
also the largest individual Asian low-cost carrier in terms of jet fleet size and passengers carried, and the
sixth largest carrier in Asia with over 6.4 crore (64 million) passengers carried in financial year 2018–
19. The airline operates 1,500 flights everyday [9] to 87 destinations – 63 domestic and 24 international.
It has its primary hub at IGI Airport, Delhi. [11] The airline was founded as a private company by Rahul
Bhatia of InterGlobe Enterprises and Rakesh Gangwal in 2006. It took delivery of its first aircraft in
July 2006 and commenced operations a month later. The airline became the largest Indian carrier by
passenger market share in 2012. The company went public in November 2015.[12]IndiGo was founded
in 2006 as a private company by Rahul Bhatia of Inter Globe Enterprises and Rakesh Gangwal.[13] Inter
Globe had a 51.12% stake in IndiGo and 47.88% was held by Gangwal's Virginia-based company
Caelum Investments.[14][15] IndiGo placed a firm order for 100 Airbus A320-200 aircraft in June 2005
with plans to begin operations in mid-2006.[16] IndiGo took delivery of its first aircraft on 28 July 2006,
nearly a year after placing the order.[17] It 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, and nine more
were acquired in 2007.[18] In December 2010, IndiGo replaced state-run carrier Air India as the third
largest airline in India, behind Kingfisher Airlines and Jet Airways with a passenger market share of
17.3%.[19]

In 2011, IndiGo placed an order for 180 Airbus A320 aircraft in a deal worth US$15 billion.[20] In
January 2011, after completing five years of operations, the airline got permission to launch
international flights. In December 2011, the DGCA expressed reservations that the rapid expansion
could impact passenger safety.[22]

In February 2012, IndiGo took delivery of its 50th aircraft, less than six years after it began
operations.[23] For the quarter ending March 2012, IndiGo was the most profitable airline in India and
became the second largest airline in India in terms of passenger market share. On 17 August 2012,
IndiGo became the largest airline in India in terms of market share surpassing Jet Airways, six years
after commencing operations.

1
In January 2013, IndiGo was the second-fastest-growing low-cost carrier in Asia behind Indonesian
airline Lion Air.[26] In February 2013, following the announcement of the Civil Aviation Ministry that it
would allow IndiGo to take delivery of only five aircraft that year, the airline planned to introduce low-
cost regional flights by setting up a subsidiary. Later, IndiGo announced that it planned to seek
permission from the ministry to acquire four more aircraft, therefore taking delivery of nine aircraft in
2013.[27] As of March 2014, IndiGo is the second-largest low-cost carrier in Asia in terms of seats
flown.[28]

In August 2015, IndiGo placed an order for 250 Airbus A320neo aircraft worth $27 billion, making it
the largest single order ever in Airbus history.[29] IndiGo announced a 3,018
crore (US$420 million) initial public offering on 19 October 2015 which opened on 27 October
2015.[30][31][32]

In October 2019, IndiGo placed another order for 300 Airbus A320neo aircraft worth
₹2.3 lakh crore (US$33 billion), surpassing its own record of the largest single order ever in Airbus

history.

IndiGo is an Indian low-cost airline headquartered in Gurgaon, Haryana, India. It is the largest airline in
India by passengers carried and fleet size, with a 59.24% domestic market share as of August 2020.[8] It
is also the largest individual Asian low-cost carrier in terms of jet fleet size and passengers carried, and
the sixth largest carrier in Asia with over 6.4 crore (64 million) passengers carried in financial year
2018–19. The airline operates 1,500 flights everyday[9] to 87 destinations – 63 domestic and 24
international.[10] It has its primary hub at IGI Airport, Delhi.[11]

The airline was founded as a private company by Rahul Bhatia of Inter Globe Enterprises and Rakesh
Gangwal in 2006. It took delivery of its first aircraft in July 2006 and commenced operations a month
later. The airline became the largest Indian carrier by passenger market share in 2012. The company
went public in November 2015.[12]

2
IndiGo was founded in 2006 as a private company by Rahul Bhatia of Inter Globe Enterprises and
Rakesh Gangwal. Inter Globe had a 51.12% stake in IndiGo and 47.88% was 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 begin operations in

mid-2006.IndiGo took delivery of its first aircraft on 28 July 2006, nearly a year after placing the order.
It 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, and nine more were acquired in 2007.[18] In December
2010, IndiGo replaced state-run carrier Air India as the third largest airline in India, behind Kingfisher
Airlines and Jet Airways with a passenger market share of 17.3%. In 2011, IndiGo placed an order for
180 Airbus A320 aircraft in a deal worth US$15 billion. In January 2011, after completing five years of
operations, the airline got permission to launch international flights. In December 2011, the DGCA
expressed reservations that the rapid expansion could impact passenger safety. In February 2012,
IndiGo took delivery of its 50th aircraft, less than six years after it began operations. For the quarter
ending March 2012, IndiGo was the most profitable airline in India and became the second largest
airline in India in terms of passenger market share. On 17 August 2012, IndiGo became the largest
airline in India in terms of market share surpassing Jet Airways, six years after commencing operations.
In January 2013, IndiGo was the second-fastest-growing low-cost carrier in Asia behind Indonesian
airline Lion Air. In February 2013, following the announcement of the Civil Aviation Ministry that it
would allow IndiGo to take delivery of only five aircraft that year, the airline planned to introduce low-
cost regional flights by setting up a subsidiary. Later, IndiGo announced that it planned to seek
permission from the ministry to acquire four more aircraft, therefore taking delivery of nine aircraft in
2013. As of March 2014, IndiGo is the second-largest low-cost carrier in Asia in terms of seats flown.In
August 2015, IndiGo placed an order for 250 Airbus A320neo aircraft worth $27 billion, making it the
largest single order ever in Airbus history. IndiGo announced a 3,018 crore (US$420 million) initial
public offering on 19 October 2015 which opened on 27 October 2015. In October 2019, IndiGo placed
another order for 300 Airbus A320neo aircraft worth 2.3 lakh crore (US$33 billion), surpassing its own
record of the largest single order ever in Airbus history. In December 2019, the airline became first
Indian airline to operate 1,500 daily flights. On 31 December 2019, it became India's first airline to
have a fleet size of more than 250 aircraft.

3
 Ownership and structure

Inter globe Aviation Limited is publicly traded under NSE: INDIGO, with a market capitalization of
about ₹32,709.61 Cr as of 23 March 2020. Indi Go is headquartered in Gurugram, Haryana, India.
Ronojoy Dutta is currently the CEO of InterGlobe Aviation. As of March 2020, IndiGo operates more
than 1,500 daily flights to 87 destinations, 63 in India and 24 abroad.

Its main base is located at Delhi, with additional bases at Bengaluru, Chennai, Hyderabad, Kolkata,
Mumbai, [ Jaipur and Ahmedabad. In January 2011, IndiGo received a license to operate international
flights after completing five years of operations. IndiGo's first international service was launched
between New Delhi and Dubai on 1 September 2011.

Indi Go placed an order for 100 Airbus A320-200 aircraft worth US$6 billion in June 2005 during the
Paris Air Show with plans to commence operations in mid-2006. The airline received its first A320 in

4
July 2006 and planned to induct 100 aircraft by 2015– 2016. IndiGo signed a memorandum of
understanding for an additional 180 Airbus A320 aircraft including 150 with the New Engine Option
(NEO) worth US$15 billion on 11 January 2011. In 2012, the airline took delivery of its 50th aircraft
and the 100th aircraft was delivered on 4 November 2014, completing its initial order ahead of schedule.
The Airbus A320neo family aircraft ordered in 2011 were to be delivered starting 2015. However, due
to a delay in the production and delivery of these aircraft, IndiGo dry-leased a total of 22 used aircraft to
cope with the demand. On 15 October 2014, IndiGo expressed its intention to order a further 250
A320neo aircraft worth US$25.7 billion at list prices. On 15 August 2015, IndiGo confirmed the order
for 250 A320neo aircraft for $26.5 billion. The order also provides IndiGo the flexibility to convert
some A320neos to A321neoLRs that can seat more passengers and fly on longer routes. The order for
250 jets was Airbus' single largest order by number of aircraft.

Indi Go received the first A320neo in March 2016. On 10 October 2019, Airbus delivered its 1000th
A320neo aircraft to Indigo. On 29 October 2019, Indi Go placed a firm order for 300 A320neo Family
aircraft comprising a mix of A320neo, A321neoLR and A321XLR aircraft, taking IndiGo's total number
of A320neo Family aircraft orders to 730. Airbus monthly reports lists the 300 order as 87 A320neo and
213 A321neoLR/A321XLR. Indi Go took delivery of its first ATR 72–600 in November 2017. As of
31 December 2019, the airline has more than 250 aircraft in its fleet, being the first Indian airline to
achieve this record. Being a low-cost carrier, Indi Go offers only economy class seating.

Being a low-cost carrier, IndiGo offers only economy class seating. To keep fares low, IndiGo does not
provide complimentary meals on any of its flights, though it does have a buy-on-board in-flight meal
programme. [74] No in-flight entertainment is available. Hello 6E, the in-flight magazine published by
IndiGo, is available for passengers to read.[75] IndiGo offers premium services, such as a pre-assigned
seat, multiple cancellations and priority check-in, to passengers who are willing to pay a higher fare.
[76] In September 2019, the company announced its tie up with Sony LIV, an on demand video app for
providing its passengers with entertainment options in-flight and at the airport. [77] List of airlines of
India List of airports in India List of companies of India Transport in India

5
Added Value

You add value to the industry if the value generated by you is not equal to the value generated
without you. Core competency adds value.

If value generated by you = value generated without you, then you are not required.

Threats to added value are:

1) Threat of imitation:

Imitation is the case when there is a diffusion of successful business model by competitors. Company
creates added value by competitive advantage through low-cost leadership.

A company chooses a particular peak depending upon its strength and weakness on this 3- D
business landscape. When a competitor tries to come to your peak and when peak gets
crowded, it comes down thereby bringing down your performance. This is the reason why
imitation is considered a direct threat.

Some of the imitation threats to Indigo are:

• Imitation of its aircrafts

• Imitation of its human resource
• Imitation of brand awareness

6
2)Threat of Substitution

• Railways and roadways (response: time saving travel)

• Technological advancement (diminishing the need to travel)
• High end airlines (the ones providing services)
• Either of the LCC

Appropriated Value

3) Threat of Hold-up

Value gets added vertically across the 5-forces model i.e. through the participants including
suppliers, buyers, competitors, etc.

Value is captured by each of these along the vertical chain. A company can’t capture all the
value because of the presence of the competitors. Competitors hold up companies or participants
from capturing whole value.

Threats of hold-up for Indigo are:

• High power of the aircraft suppliers i.e. Airbus and Boeing

• High power of supplier of pilots due to the shortage of commercial aircraft pilots
• Holding up of value by the limited number of suppliers of ATF: IOC, Hindustan
Petroleum Corporation, Bharat Petroleum and ONGC
• Government interference: government has a control over fuel prices, foreign investments
(i.e. FDI policies), tourism laws, taxes, etc.

7
 4) Threat of Slack

Slack is the gap b/w the appropriated value and the value actually captured. Slack generates not
because somebody takes any value from some organization, but because the firm looses it itself.
Slack can’t be avoided but it can be maintained. This is the gap which the firm creates to
generate value.

Threats of slack for Indigo are:

• Increasing fuel prices

• Increasing labour costs
• High capital investment
• Rising airport costs

5) Value Chain of Indig

8
 MARKET SHARE OF INDIGO

Despite only entering the market less than six years ago in Aug-2006, Indigo has rapidly soared
up the ranks to become the second largest domestic carrier, overtaking Air India and
Kingfisher Airlines on the way. In doing so, Indigo has overtaken more well- established carriers
that have expanded not only organically but through acquisitions and with a mixed-product that
offers both full service and low cost products. And the growth for Indigo is expected to continue,
with the airline likely to remain the fastest growing airline in India in 2012, as it continues to add
capacity on both domestic and international routes, with the latter expected to generate a growing
proportion of total revenue.

Indigo held a 21% domestic market share at the end of 2011, behind Jet Airways/JetLite. For the
second consecutive year, the carrier reported domestic passenger growth of almost 40% to 11.8
million, with total passenger numbers exceeding the 12 million-passenger mark following the
launch of international operations in Sep-2011.

According to DGCA monthly traffic data, Indigo handled over 1 million passengers for the first
time in May-2011 (with 1.1 million passengers), a feat replicated in Jun-2011, Oct- 2011, Nov-
2011, Dec-2011, Jan-2012 and Feb-2012, with over 1.1 million passenger in each of these
months.

Fig: Indigo passenger numbers: Aug-2006 to Feb-2012

9
Domestic load factors in 2011 were also strong, averaging 83.3%, based on DGCA data, with
load factors exceeding 90% in Dec-2011. In 2010, load factors exceeded 90% on four occasions
– in May-2010 (92.3%), Jun-2012 (90.7%), Nov-2010 (91%) and Dec-2012 (93.3%). So far in
2012, the carrier has reported load factors of 85.9% in Jan-2012 and 82.8% in Feb-2012.

Fig: Indigo load factor: Apr-2004 to Feb-2012

10
In the month of Feb-2012, the LCC held a 21.3% market share compared to a combined 29.8% at
Jet Airways/JetLite. Indigo will likely take the top spot from Jet Airways, with growth of around
12% p.a. expected over the next few years.

Fig: India domestic market share by carrier: Feb-2012

11
Growth Path of Indigo Airlines

12
Load factors increase in Dec-2011

The month of Dec-2011, like Nov-2011, witnessed a continued increase in seat factor due to the ongoing
peak season. IndiGo, in addition to being one of the largest and fastest growing domestic carriers, reported
the highest domestic load factor in Dec-2011 at 90.4%, to be the only carrier with load factors of above
90% in the domestic market in the month. All carriers reported load factors of above 75% in the month.
Source: Indian Ministry of Civil Aviation

Indian carriers seat factor: Dec-2011

Source: Indian Ministry of Civil Aviation

Growth to slow in 2012 but long-term growth of around 15% expected over next five years

India's domestic aviation market expansion has been among the strongest in the world, tripling in the past
five years, according to IATA, to become the ninth largest aviation market in the world. Given the strong
market fundamentals, the robust rate of growth is expected to continue with the Indian Ministry of Civil
Aviation’s Vision 2020 statement envisaging a compound annual growth rate of around 15% in the next
five years. However, domestic passenger growth will likely slow in 2012 to just under 10%.

13
As previously noted by CAPA, Indian aviation enters 2012 facing its most critical challenges since the
advent of the 2004 industry reforms. The key challenge going forward, amid an environment of slowing
GDP growth, will be to ensure yields and profitability are maintained. At the same time, the nation’s full
service carriers continue to suffer under the burden of approximately USD16 billion in debt, ensuring
financial recovery will be slow in India’s aviation market.

Meanwhile, both capacity reductions and fare increases are likely in 2012, as the industry recognises that it
is better to have a 10-12% growth and be profitable instead of growing at 17-18% and lose USD2.5 billion.
Improved profitability at airlines will also have a positive impact on airport operators, who are facing large
non-payment in dues by airlines including Air India and Kingfisher Airlines.

• 10 consecutive years of Profitable operations

• Market share of 54.7% as of June, 2021.
• Fleet of 275 aircraft including 122 new generation A320 NEOs, 84 A320 CEOs, 29 ATRs and 40
A321 NEO.
• Recognized as ‘Great Place to Work for in India’ for 8 years in a row (2008- 2015)
• Named as Aon’s Best Employer for the year 2016 and 2017

14
 RATIONALE
IndiGo is India’s largest passenger airline with a market share of 54.7% as of June, 2021. We primarily
operate in India’s domestic air travel market as a low-cost carrier with focus on our three pillars – offering
low fares, being on-time and delivering a courteous and hassle-free experience. IndiGo has become
synonymous with being on-time.

Since our inception in August 2006, we have grown from a carrier with one plane to a fleet of 275 aircraft
today. A uniform fleet for each type of operation, high operational reliability and an award winning service
make us one of the most reliable airlines in the world.

IndiGo has a total destination count of 91 with 67 domestic destinations and 24 International. This includes
Darbhanga (DBR) which is now open for sale.

IndiGo is not only the most efficient low fare operator domestically but is also comparable with global low
cost airlines. We are constantly enhancing our engagement with our passengers to augment their travel
experience. From multichannel direct sales (including online flight booking, call centers and airport
counters), to online flight status checking, an exclusive IndiGo app for Android, we have transformed air
travel in India. Today, we are India’s most preferred airline. At IndiGo, low fares come with high quality.

Being courteous and hassle-free starts with being a hassle-free place to work. A highly engaged and
motivated workforce leads to higher levels of customer service. Our state-of-the-art ‘ifly’ facility is
designed to deliver a real-time training experience to all our new recruits. This training facility is
considered to be one the best aviation training facilities in India. With our people-friendly culture at the
heart of all we do, we continuously help the company staff find work-life balance. Having won
‘Companies with Great Managers’ award three years in a row and being ‘Great place to work - Certified’
in 2021, is testimonial to the culture we have, making us one of the best launch pads for future leaders.

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 OBJECTIVE

• PESTLE ANALYSIS

A PESTLE analysis is an analysis of the external macro-environment that affects all firms in an
industry. P.E.S.T.L.E is an acronym for the Political, Economic, Social, Technological, Legal
and Environmental factors of the external macro-environment. Such external factors usually are
beyond the firm's control and sometimes present themselves as threats. For this reason, some say
that "pest" is an appropriate term for these factors.

Political /legal Factors

• The government has opened up the Indian skies by allowing up to 49% FDI in Domestic
Airlines which is expected to give an impetus to the sector which is reeling under huge cost
side pressures

• Government allowing direct import of ATF is another move in the right direction to decrease
the operating costs

• Micro-managing by the government is seen as a great negative for the industry as the
airlines are not being given enough freedom to run their operations

• Slow growth of airport infrastructure because of government impasse

• Lack of government initiatives stalling the growth of the sector.

• Overall the government is slowly waking up to the issues plaguing the sector and is taking
few steps to improve the health of the sector, Indigo which is the market leader in the LCC
segment stands to be benefitted the most

16
 Economic factor

• Business cycles have a wide reaching impact on the airline industry. During recession,
airline is considered a luxury & therefore spending on air travel is cut which leads to reduce
prices. During prosperity phase people indulge themselves in travel & prices increase

• The economy is slowing down which is a huge negative for the industry as the capacity is
getting underutilized and the companies are being forced to reduce the ticket prices to reduce
the capacity wastage

• Consistently high oil prices along with high taxes contribute significantly to the operational
costs

• Depreciating value of rupee is adding to costs as substantial portion of other operating costs
like lease rentals, maintenance, expat salaries and a portion of sales commissions are USD-
linked or USD-denominated
• The industry operates under high cost of capital which again adds to the operational costs
but the positive side for indigo airlines is that it is in a far better position

17
financially than the competition which helps it to raise capital comparatively at a lower cost

Social factors
• The changing travel habits of people have very wide implications for the airline industry. In
a country like India, there are people from varied income groups. The airlines have to
recognize these individuals and should serve them accordingly
• The destination, kind of food etc all has to be chosen carefully in accordance with the tastes
of their major clientele especially, since India is a land of extremes there are people from
various religions and castes and every individual travelling by the airline would expect
customization to the greatest possible extent. For e.g. A Jain would be satisfied with the
service only if he is served jain food and it should be kept in mind that the customers next to
him are also jain or at least vegetarian.
• With the income levels rising in the Tier-2 and Tier-3 cities, there is demand being
generated for air connectivity in these cities also.

• Technological factors
• The industry is in the process of adopting a new standard for distributing airfare information
which the IATA has termed as NDS which stands for New Distribution Capability which
will help the airlines to tailor the services to each customer and will add value to both the
airline as well as the customer
• Growth of Electronic ticketing satellite based navigation systems
• Leveraging technology has made check in times to reduce which has contributed in
efficiency improvements for the airlines
• The Airports Authority of India is developing modern communication, navigation,
surveillance, and air traffic management systems for India's aviation sector that will help the
country meet the expected growth and demand for air passenger and cargo service over the
next decade.

18
Environmental
• With air traffic growing, environmental concerns are also gaining an increasing importance.
Although the aerospace industry has already made significant efforts to reduce its environmental
footprint, further technological and operational improvements are necessary to outweigh the
impact of traffic growth.
• The two main environmental issues associated with aviation are noise and emissions. Within
emissions, the distinction is made between local air quality and climate change.
• Noise: The principle sources of aircraft noise are the aircraft’s engines and, particularly during
approach, airframe noise when the aircraft’s flaps/slats are fully extended and the landing gear
are deployed. Air traffic movements have

19
• Significantly increased, and will continue to grow. As a result aircraft noise continues to
have a very significant environmental impact around airports and be a source of disturbance
to the public. Many airports have implemented noise related charging schemes, night time
restrictions or even night curfews. The number of airports affected in this way will likely
increase further during the next decade.
• Local air quality: Air pollutants such as Nitrogen Oxides (NO2 and NO) and particulate
matter (PM); have been identified as key contributors from air transport to the problems of
local air quality. Exposure to particulate matter can lead to impacts ranging from minor
effects on the respiratory system to premature mortality. It is therefore likely that air quality
will be a significant feature in the debate concerning additional runway capacity.

• Alternative Fuels: Alternative fuels should become a major driver in reaching the objective
of carbon-neutral growth for aviation. Drop-in bio fuels have been successfully tested and
are already in use on certain commercial routes. The industry is aiming at replacing 6% of
current fossil fuel with bio fuel by 2020. Beyond the complex issue of life cycle assessment,
the major challenge will be to ensure that bio fuels are supplied in a reliable and cost-
effective manner to air operators
• Land acquisition has become one of the serious issues plaguing the industry because it is
stalling the building of new infrastructure which is the need of the hour

• Future objectives: The ultimate aim for the industry must be sustainable development,
where the environment is not sacrificed for growth and future generations will be able to
continue to benefit from air travel. The aviation industry has already started to tackle this
formidable task, but continued and imaginative effort is required to ensure the industry
maximises the use of its "environmental capacity"

20
 1. Porter’s Five forces Analysis

1. Threat of New Entrants

• Threat of New Entrants Aviation industry is highly cost intensive. Besides it has to go
through a number of regulatory compliance before it gets an excusatory order. The
factors which make entry of new entrants in the Indian Aviation sector a difficult task are
the following
• The capital requirement- An airline is required to have capitalization of minimum thirty
crores without which it is not allowed to takeoff.
• Expected retaliation-The market is concentrated in the hands of a few players thus any
new player would to face stiff competition and retaliation from the existing players such
as Jet Airways and Indian.
• Inadequate airport infrastructure often makes it difficult for the new entrants to get right
flying slot time.
• Shortage of pilots and high fuel costs also pose a threat as the existing demands itself are
not being fulfilled.
• Exit barriers-The high capital requirement makes it difficult for the companies to exit the
market but being a growing industry the existing players are willing to acquire and make
exit for an operator less difficult.

2. Bargaining Power of Suppliers

• Any airlines in general face a duopoly of two major suppliers of aircrafts i.e. Airbus and
Boeing. There are other suppliers like Dauphin,Dronier,Bell,ATR-42 but do not meet the
requirements to serve the low cost commercial aircraft carriers, particularly IndiGo
airlines. Fleet Forecast for the India-Region 2006-2011 shows that there will be approx.
85% growth in the order rate of air carriers. Thus, suppliers are few and thus in better
position to bargain as they always finds customers for their aircrafts
• IndiGo fleet comprise of Airbus-A320 and the switching cost is high due to the limited
number of suppliers.
• Due to shortage of commercial aircraft pilots in India the supply of pilots is concentrated,
hence increasing their power.
• There are only four suppliers for ATF (Aviation Turbine Fuel); IOC, Hindustan
Petroleum Corporation, Bharat Petroleum and ONGC and since their number is limited,
they possess more 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.

21
 • The brand value of suppliers is high due to their less number and results in higher
bargaining power for them.
• 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.
• The suppliers are few and thus in better position to bargain as they always finds
customers for their aircrafts.

2. Bargaining Power of Buyers

• Buyers in airlines industry are large in number and highly fragmented thus lowering their
power .With the growing Indian economy and increasing low cost carriers, the buyers
have increased and so have the growth opportunities.
• 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.
• Furthermore the players in the particular strategic group do have minimalistic
differentiating points.
• Backward integration from the buyers end is very difficult and next to impossible.

3. 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 airlines:
• Very little scope for differentiation between competitors’ products and services
• 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:

22
 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, and plans 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

5. Availability of Substitutes

The substitute for low cost airline company is the railways. But this substitute is not very
powerful due to the following reasons:

1. Customers use airline transport as it is convenient and saves travelling time. So trains
cannot work as a substitute to save time.
2. Secondly, many customers use airlines as a status symbol. So again, trains cannot
substitute for prestige.

23
 HYPOTHESES

Review of Literature and Hypothesis Development Fear of the Economic Crisis and Mental Health
Fear has many implications. Its purpose may include it as a strategy to attain a goal. The fear of the
unknown is a driving force to take advantage of the insecurities of the other party. The factor fear has
not only been considered as a strategy to motivate employees in corporate settings, but it is also used
by political parties to set their agendas . Fear arises from an unplanned situation; in some cases, we can
predict the outcome, and in other cases, the results may stay unrevealed. Sudden changes in the socio-
structural circumstances lead to anxiety and fear among people. Research reveals that these
fluctuations create angst among the masses and compel people to take harsh decisions such as self-
harm and suicide [19]. Research indicates that the economic crisis includes unemployment, financial
sufferings of employees, and job insecurity Giorgi also explained the economic crisis as a macro
stressor including multiple factors of an employee’s economic life, including the fear of job loss and
job insecurity. The literature also considers the fear of economic crisis as an innovative construct and
defines it as a perception of the employee about the organization that something such as downsizing
will take place in the organization soon.

A study revealed that the primary reason for suicide was the pressure that there are no jobs in the
market and unemployment. Prolonged economic crisis leads to financial hardships among the people
working or trying to find work. These sufferings cause psychological distress and fear of job loss
among the employees. The economic crisis has a significant impact on working people [23]. This
perception of crisis may shape stress, anxiety, and turnover, and absenteeism may significantly affect
the employees’ health [24]. Stress theory explains individuals and families’ reactions and how they
react when they face stress . Although the economic crisis affects everyone, people have a different
response and handle stress in varied ways. The economic crisis due to COVID-19 has raised
challenges for the economies to reach back on the track of progress [16]. Every country has been
affected by this disease, and not only developmental programs have been at a halt, but people are also
struggling mentally and financially. Roca and Voydan off and Donnelly in their research proved that
the economic crisis had a direct and negative impact on the mental health of employees. Previous
research also illustrated that employees’ mental health is adversely affected by the economic crisis
prevailing in the country [28]. The study conducted by Voydan off also highlighted that income loss,
lack of finances, and unemployment also causes depression and affect the employees’ mental health. J.
Open Innov. Technol. Mark. Complex. 2021, 7, 30 4 of 17 2.2. Non-Employability and Mental Heal
24
 RESEARCH METHODOLOGY

The present study is attempted to evaluate the operating efficiency of two scheduled domestic airlines.
The data which has been used for analysis is secondary in nature, which is collected from the Profit
and Loss A/c and Balance Sheet associated with schedules, Capita line data base and annexure
available in the published annual reports of airlines. The sample has been selected with the aim to
make a comparison between national carrier and private carrier in terms of operating efficiency, which
include Air India (National Carrier) and Indigo Airlines (Private Carrier). The data have been collected
for the past twelve years ranging from 2004-05 to 2015-16 and compiled into tables. The tools and
techniques for analysis include Ratio Analysis, Mean, Standard Deviation, Co-efficient of Variation
and Compound Annual Growth Rate. Collected data have been complied in tables. Two types of tables
have been used for each airline; one in which financial data related with variables have been complied
and calculated ratios has been shown in second type of tables.

25
 EXPECTED CONTRIBUTION

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products -
cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism.
India has been recognized as a destination for spiritual tourism for domestic and international tourists.
In his Independence speech from Red Fort, Prime Minister Mr. Narendra Modi urged people to visit
15 domestic tourist destinations in India by 2022 to promote tourism. India ranked 34 in the Travel &
Tourism Competitiveness Report 2019 published by the World Economic Forum.
In WTTC’s Economic Impact 2019 report, India’s Travel & Tourism GDP contribution grew by 4.9%,
which was the third highest after China and Philippines. Additionally, the report also highlights that
between 2014-2019, India witnessed the strongest growth in the number of jobs created (6.36 million),
followed by China (5.47 million) and the Philippines (2.53 million).
Being a low-cost carrier, IndiGo offers only economy class seating. To keep fares low, IndiGo does
not provide complimentary meals on any of its flights, though it does have a buy-on-board in-flight
meal programme. No in-flight entertainment is available. Hello 6E, the in-flight magazine published
by IndiGo, is available for passengers to read. IndiGo offers premium services, such as a pre-assigned
seat, multiple cancellations and priority check-in, to passengers who are willing to pay a higher fare. In
September 2019, the company announced its tie up with SonyLIV, an on demand video app for
providing its passengers with entertainment options in-flight and at the airport.
The Ministry of Tourism has created a policy for development and promotion of caravan and caravan
camping parks. On January 25, 2021, Union Tourism and Culture Minister Mr. Prahlad Singh Patel
announced plan to develop an international-level infrastructure in Kargil (Ladakh) to promote
adventure tourism and winter sports.
The Ministry of Road Transport and Highways has introduced a new scheme called ‘All India Tourist
Vehicles Authorisation and Permit Rules, 2021’, in which a tourist vehicle operator can register online
for All India Tourist Authorisation/Permit. This permit will be issued within 30 days of submitting the
application.
The tourism & hospitality sector’s direct contribution to GDP is expected to reach Rs. 12.68 trillion
(US$ 194.69 billion) in 2028. The Federation of Associations in Indian Tourism and Hospitality
(FAITH) Chairman Mr. Nakul Anand, recently spoke at a conference on the India Tourism Vision Day
stating that Indian tourism is estimated to contribute 9-10% to India's GDP on a direct and indirect
basis.

26
In FY20, 39 million jobs were created in the tourism sector in India; this accounted for 8.0% of the
total employment in the country. International Tourists arrival is expected to reach 30.5 billion by
2028. e-Visa facility was offered to 171 countries as of March 2021.
During 2019, foreign tourist arrivals (FTAs) in India stood at 10.89 million, achieving a growth rate of
3.20% y-o-y. During 2019, FEEs from tourism increased 4.8% y-o-y to Rs. 1,94,881 crore (US$ 29.96
billion). In 2019, arrivals through e-Tourist Visa increased by 23.6% y-o-y to 2.9 million. In 2020,
FTAs decreased by 75.5% YoY to 2.68 million and arrivals through e-Tourist Visa (Jan-Nov)
decreased by 67.2% YoY to 0.84 million.
Under the Swadesh Darshan scheme, 77 projects have been sanctioned of worth Rs. 6,035.70 crore
(US$ 863.60 million). In Union Budget 2020-21, the Government has allotted Rs. 1,200 crore (US$
171.70 million) for the development of tourist circuits under Swadesh Darshan for Northeast.
The Ministry of Tourism launched the NIDHI portal to understand the geographical spread of the
hospitality sector, its size, structure and existing capacity in the country. NIDHI will serve as a
common data repository for the Ministry of Tourism, State Departments of Tourism and Industry; this
will enable the Central and State Governments to deliver better support and services including policies
and strategies for the tourism sector. As of December 31, 2020, 34,399 accommodation units have
been registered on the portal.
The launch of several branding and marketing initiatives by the Government of India such as
‘Incredible India!’ and ‘Athiti Devo Bhava’ has provided a focused impetus to growth. The Indian
Government has also released a fresh category of visa - the medical visa or M-visa, to encourage
medical tourism in the country. The Government is working to achieve 1% share in world's
international tourist arrivals by 2020 and 2% share by 2025.
Amid the relaxation provided by the government after the COVID lockdown, the Indian Association of
Tour Operators (IATO) has urged the government to finalise a roadmap for resumption of international
flights and facilitate e-visas and tourist visas. The Indian Railway Catering and Tourism Corporation
(IRCTC) runs a series of Bharat Darshan tourist trains aimed at taking people to various pilgrimages
across the country.
Subsequently in November end, India introduced a graded relaxation of its visa and travel restrictions
for more categories of foreign nationals and Indian nationals.
Post the pandemic crisis, the government plans to tap into regional tourism by opening doors for South
Asian country tourists.

27
The Government is also making serious efforts to boost investment in the tourism sector. In the hotel
and tourism sector, 100% FDI (Foreign Direct Investment) is allowed through the automatic route. A
five-year tax holiday has been offered for 2-, 3- and 4-star category hotels located around UNESCO
World Heritage sites (except Delhi and Mumbai).
Government is planning to boost the tourism in India by leveraging on the lighthouses in the country.
71 lighthouses have been identified in India which will be developed as tourist spots. The lighthouses
will feature museums, amphi-theatres, open air theatres, cafeterias, children’s parks, eco-friendly
cottages and landscaping according to its capacity.

• Airline Tourism and Hospitality Management are among the most vivid divisions of hospitality that
offers jobs to thousands of people all across the world. It is a wide and booming industry and it
facilitates trade, International travel, and globalization.
• The candidates learn how to respect, show hospitality towards the guests so that they are happy and
in turn give them more business.

• Your conversational skills are honed once you opt for this course.

• Professionals get an opportunity to travel to different exotic destinations and meet people of
dissimilar cultures.

• The demand for Airline hotel management professionals is increasing with each passing day in
India as well as abroad. There are several popular chains of hotels and restaurants that hire the
candidates directly once they are done with the course. The major chains in the hotel industry that
are hiring students who have done Airline Hotel Management are the Taj hotel, Oberoi Hotel, ITC
group, and Hilton group to name a few.

28
 DATA COLLECTION AND DATA ANALYSIS

Table I: Financial Data of I

Table I exhibits the financial data of Indigo Airlines. The amount of power and fuel cost of Indigo
Airlines was `145.35 cr. in 2006-07 which increased up to the year 2014-15 and decreased in the
following year. The amount of employee cost was `60.82 cr. in 2006-07 which increased up to
`1789.92 in 2015-16. The selling and administrative cost is an essential part of an enterprise’s cost
structure. In the beginning of study period, Indigo airline has spent comparatively less amount on its
selling and administrative later on the amount has shown an increasing trend. The amount of selling
and administrative cost has been highest in 2015-16. The amount of cost of goods sold has increased
up to the year 2014-15 and decreased in the following year. As in case of airlines, the cost of goods
sold is largely composited of power and fuel, for that reason cost of goods sold has decreased in the
last year. The data for net profits depicts that the airline was not able to obtain the profits in the first
two years of study period; it may be due to the introductory stage of airline hence resulted into losses.

29
The amount of net profit of Indigo Airlines is not consistent throughout the study period. The amount
of net profit of the airline has been highest in 2015-16. The airline obtained relatively less amount of
net sales in the first few years of study period as compared to the other years. The airline has spent
comparatively less amount on employee cost as the mean value for employee cost is not as much of
other spending. The highest mean value is found for COGS since the operations of an airline primarily
depend upon the power and fuel, the foremost part of COGS. By comparing coefficient of variation, it
is concluded that there is less variation in power and fuel cost. The greater variability is found in net
profit. The comparative analysis on compound annual growth rate shows that the net sales have shown
remarkable growth.
Table II: Ratio Analysis of Indigo Airlines

30
Table II exhibits the ratio analysis of Indigo Airlines. The power and fuel cost ratio of Indigo Airlines
ranged from 67.20% to 29.66% during the study period. It is clearly seen in the table that the ratio has
decreased in the last two years of study period due to cut in ATF prices. The employee cost ratio of
Indigo Airlines ranged from 28.12% to 11.09% during the study period. The employee cost ratio is not
consistent during the study period. The data for selling and administrative expenditure ratio of Indigo
Airlines depicts that the ratio ranged from 52.96% to 19.30% during the study period. It depicts that
the airline has spent relatively more amount on selling and administrative cost in the first few years of
study period as compared to other years.

The amount of net sales of above airline has increased during the entire study period, for that reason,
the selling and administrative expenditure ratio is not as increased as the spending over selling and
administrative has been increased. The COGS ratio is found inconsistent during the entire study
period. The data for net profit ratio illustrates that the ratio was negative in the first two years due to
the net losses incurred by the airline. The net profit ratio of Indigo Airlines ranged from -93.30% to
12.33% during the study period. The analysis on mean values of expenses ratios exhibits that the mean
value of cost of goods sold is more than the other mean values however it is close to the mean value of
power and fuel expenditure. The airline obtained losses in first two years of study period resulting in
negative mean value of net profit ratio of Indigo Airlines. The expenses incurred by the airline on all
variables have reduced during the study period resulting in negative CAGR of all expenses during the
study period. The result on coefficient of variation highlights that the amount of cost of goods sold has
relatively less variations and more variability is seen in the amount of selling and administration
expenditure.

31
Table III exhibits the financial data of Air India. The data given in above table depicts that the
spending over power and fuel expenditure is not consistent during the study period. The amount of
power and fuel expenditure of Air India has been highest in the year 2012-13. The employee cost of
Air India ranged from `3224.50 cr. in 2007-08 to `2345.52 cr. in 2015-16. It signifies that the amount
of employee cost has decreased from 2011-12 to 2015-16. The data for selling and administrative cost
shows that in the beginning of study period, the airline has spent relatively more amount for promoting
the sales subsequently the cost has decreased. The data for net profit shows that the airline has
obtained huge losses during the entire study period. It is clearly seen in the table that the amount of net
losses has decreased in the last two years of study period which may be a positive sign for the above
airline. The amount of net sales was `13638.35 cr. in 2006-07 and increased up to `19992.33 cr. in
2015-16. The amount of net sales of Air India has increased during the study period. Table IV exhibits
the ratio analysis of Air India. The power and fuel cost ratio of Air India ranged from 46.35% to
29.24% during the study period which signifies that the proportion of power and fuel to net sales has
decreased in the last two years of study period. The employee cost ratio ranged from 23.64% to
11.73% during the study period. The airline has cut down the cost incurred on employees due to
financial problems since suffering from losses during the entire study period. The same results have
been for selling and administrative cost as it ranged from 27.77% to 8.55% during the study period.
The COGS has increased during the study period resulting in increase in the ratio. The COGS ratio of
Air India ranged from 46.35% to 50.11% during the study period. The net profit ratio of Air India has
been negative throughout the study period since the airline incurred huge losses during the entire study
period.

The comparative analysis on mean value of expenses ratio highlights that the mean value of COGS
ratio is more as compared to other expenses ratio, on the contrary, the spending on selling and
administrative has been lowest as compared to the other expenses. The airline could not earn profit
even in a single year of study period hence resulted into negative mean value of net profit ratio. It is
analyzed that the selling and administrative cost ratio has more variations and less variability is seen in
employee cost ratio based on results of coefficient of variation. It is clearly seen in the table that
the expenses ratio of Air India has reduced during the study period resulting in their negative CAGR.
.

32
 FINDINGS AND CONCLUSION

The Indian aviation sector is a crucial part of Indian economy as well as one of the fastest growing
aviation industries in the world. There is a large scope of growth in this sector which will definitely
affect the growth of Indian Economy positively. The present study is conducted to evaluate the
operating efficiency of Indigo Airlines and Air India. It is analyzed from the study that the national
carrier i.e. Air India could not earn profits throughout the study period. The resulted conducted on the
expenses ratio and profitability ratio depicts that the operating efficiency as well as profitability of Air
India has been poor during the study period. On the other hand, the financial performance of private
carrier i.e. Indigo Airlines has been good as compared to Air India which is clearly depicted in the
ratio analysis. It is concluded that there is a greater need to improve the financial position of Air India
as it is a national carrier which leads the Indian economy.

33
 RECOMMENDATION

Tangible Resources:

• Physical Resources
Aircrafts:
Indigo is the first Indian airline with Sharklet equipped A320. Indigo welcomed its first
Sharklet equipped Airbus A320 on January 28, 2013.Sharklets are newly designed wing-tip
devices that improve the aircraft’s aerodynamics and significantly cut the airline’s fuel burn
and emissions by four per cent on longer sectors.
(Source: http://www.airbus.com/presscentre)
The airline currently operates 399 daily flights with a fleet of 65 Airbus A320 with
an average fleet age of 2.3 years and flies to 33 destinations (Source:
www.goindigo.in)

Fuel:
Fleet maximum fuel capacity is 23,860 Litres. Fuel is a resource for Indigo as due to the use
of A320 it attains around 4% of fuel burn reduction.
Further ATF (Aviation Turbine Fuel) is a complementary product for airplane and it constitutes
almost 35% of production cost.

• Financial Resources
As confirmed by India's Minister of Civil Aviation, Ajit Singh on 22-Mar-2012, all
scheduled Indian airlines except Indigo are incurring losses, based on returns filed by
airlines with the Directorate General of Civil Aviation (DGCA).
As the only profitable airline in India, Indigo was able to put an order of 180 new aircrafts
A-320 as of in 2011, in a total cost of USD 15 billion. Financial resources also enable Indigo
to phase out aircrafts older than 6 years, in order to keep the average fleet age low.

• Human Resources
In a time of crisis when competitors are laying off staff or leaving the market (Kingfisher),
Indigo is on lookout for more pilots, cabin attendants, customer service and airport service
agents in order to keep growing and in congruence with its new aircrafts.
Indigo has one of the highest percentages of pilots who are trained to fly under dense fog.
Great employee relationship- Indigo’s president, Mr. Aditya Ghosh, makes sure he is
available to 4000+ employees of Indigo; was named the travel industry’s best employer in
2010.

34
 The attrition rate in Indigo is negligible or zero percent.

• Technology Resources
Indigo uses e-ticketing facility which makes travel by Indigo hassle free. E-tickets add to
its cost efficiency as it saves fee and commission paid to agents.
Unlike manual systems used by other airlines, Indigo planes are equipped with a digital
link system for transmission of short, simple messages between aircraft and ground
stations via radio or satellite called Aircraft Communications Addressing and Reporting
System (ACARS). Before every Indigo flight departs an automatic message is triggered
from the aircraft to its operations control centre – and immediately the same departure
time gets recorded in the software. Similarly, the moment the flight lands an automatic
message is triggered from aircraft to control centre. Hence, the on-time performance is
diligently monitored for every flight in real time.

INTANGIBLE RESOURCES:

- Brand Equity/Reputation:
Indigo is the most reputed low cost carrier due to the following reasons:
• On time arrivals is the key differentiating factor for Indigo Airlines.
• Indigo keeps implementing new and innovative ideas to increase the quality of customer
service. 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, rather
than lining up at the check-in counter.
• Compared to the direct competitors, that is, the other low cost carriers like SpiceJet,
Jetlite, etc. Indigo offers the lowest airfare.
• Reputation of high value added services-which also contributes to “word of mouth”
promotion of brand.

- Social Capital:
• Indigo has amicable relationship with the other organizations that contribute to the value
addition for the service provided to the customers.

35
 Indigo has engaged many travel web-portals and regional travel agents with
incentives like booking commissions, etc. There have been no instances of distress
between Indigo and its other collaborators, that is, suppliers.
Collaboration with hotels: Mumbai-based hotel chain operator Sarovar Hotels and
Indigo Airlines announced a marketing tie-up for frequent travellers. The highlights
are:
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.
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 properties.
Hence Indigo has a remarkable social capital.
(Source: http://www.business-
standard.com/article)

Brand Awareness:
Indigo is a well known Low Cost Carrier in India. The following points contribute
to the brand awareness of Indigo:
Advertising using print media like newspapers, billboards, etc.
Advertising has been done my TV commercials as well. Indeed indigo was the first
low cost airline to release a TVC. Unlike regular airline ads, it opted for an animated
ad-to cut the cost and break the clutter. Further the series of commercials continued
like- the “on time” commercial, the anthem commercial, etc.
It may not pay for an advertisement in a newspaper, but has been covered in news for
its low cost strategy implementation.
As Indigo provides better value added services to the customers, word of mouth
promotion also works in its favour.

Employee Relationship:
Good Employee Relationship is a key factor to sustain competitive advantage. Indigo
provides several incentives to its employees.
As per the news article published in The Hindu Business Line:
“At a time when several domestic airlines are looking to prune their staff strength,
the Delhi-based low cost airline, Indigo, is on the lookout for more pilots, cabin
attendants, customer service and airport service agents.”

The above facts show that Indigo has taken a positive approach while dealing with
its loyal employees at the time of economic slowdown.
 ANNEXURE

1. A thin layer of air next to the surface of an airfoil which shows a reduction in speed due
to the air’s viscosity.
A. Space Shuttle
B. Center of Gravity
C. Boundary Layer
D. Airfoil

2. The movement about the vertical axis produced by the rudder and controlled by pedals.

A. Fuselage
B. Scrip
C. Infomercial
D. Yaw

3. A powered heavier than –air aircraft with fixed wings from which the aircraft derives most of

its lift.

A. Airfoil
B. Seaplane
C. Airplane
D. Reynolds

4. Hinged main Surface part that help control banking for a turn
A. Aileron
B. Horizontal Stabilizer
C. Lateral Axis
D. Aerodynamics

5. A force caused by the gravitational attraction of the Earth.

A. Pitch
B. Aerospace Engineer
C. Airfoil
D. Weight.
6. Caused by the separation of airflow from the wings upper surface resulting in a rapid decrease

in lift.

A. Taper
B. stall storyboard
C. leading Edge.
D. Stall.

7.Design Machine that fly

A. Wash in /Wash Out

B. Aerospace Engineer
C. Aileron
D. Glider.

8. to set or thrust in motion

A. Lapse Rate
B. Wing span
C. Launch
D. Script.

9. the written text of a play of a film or broadcast

A. Pitch Aerospace
B. Unmanned aerospace Vehical
C. Static Stability
D. Airfoil.
 BIBLIOGRAPHY

• Barros, C. P., & Peypoch, N. (2009). An Evaluation of European Airliines' Operational

Performance. International Journal of Production Economics , 122, pp. 525-533.

• Capobianco, H. M., & Fernandes, E. (2004). Capital Sturcture in the World Airline
Industry. Transportational Research Part A , 38, pp. 421-434.

• http://dgca.nic.in/reports/Market.pdf

• http://www.airbus.com/newsroom/press-releases/en/2013/01/indigo-becomes-the-first-
indian-airline-with-sharklet-equipped-a320.html

• http://www.spjimr.org/blog/will-indigo-make-history-buying-out-air-india

• http://www.wns.com/Portals/0/Documents/Whitepapers/PDFFiles/651/36/WNS_Whitepa
per_A%20New%20Flight%20Plan%20for%20India%E2%80%99s%20beleaguered%20a
irline%20industry.pdf

• Saranga, H., & Nagpal, R. (2016). Drivers of Operational Efficiency and its Impacts on
Market Performance in the Indian Airline Industry. Journal of Air Transport Management
, 53, pp. 165-176.

https://images.app.goo.gl/5mgJtZWHbrmM13W79

https://images.app.goo.gl/hBWx1DF3hmRrMeoQ8