INDIGO-STRATEGY PRESENTATION

Roll no-01,04,14,36

Introduction to the airline Industry and Indigo airlines

India is one of the fastest growing aviation industries in the world. The growth in the aviation industry looked promising and hence attracted many low cost carriers like SpiceJet, GoAir and IndiGo. IndiGo is the latest entrant as a low cost carrier in the aviation industry of India. IndiGo serves approximately 33 cities with a fleet of approximately 65 A320s.

SWOT Analysis
STRENGTHS WEAKNESS 1) Backing from promoters 1) scope for differentiation is low 2)Brand awareness 2) services can be quickly imitated 3)Safety record 3)Quickly changing business conditions 4)Well trained staff OPPORTUNITIES THREATS 1)Increasing middle class 1)Fuel price surge 2)Cargo market 2)Government interventions 3)Increase in taxes 4)Economic downturn

PESTLE Analysis

Political/Legal factors
49% FDI in domestic airline sector Lack of government initiatives stalling the growth Slow growth of airport infrastructure because of government impasse

Economic factors
Business cycles impact airline industry( treated as luxury during economic downturn) High fuel prices and surging taxes Depreciating value of the rupee( leases, expat payments in USD) Industry operates under High Cost of Capital.

PESTLE Analysis..

Social factors

Changing travelling habits Raising income levels in tier 2 and tier 3 cities Small things like serving right food matters in a socially sensitive country like India.
Growth of e-commerce and based ticketing solutions Helped in reducing check in times Adding value to customers and airline using NDS(New Distribution Capability) Noise Low air quality

Technological factors

Environmental factors

PORTERS 5 FORCES

Threat to new entrants

Very high initial capital requirements Stiff competition from existing players Product/Service differentiation is low High barriers to exit

Bargaining power of suppliers

High bargaining power Number of suppliers are very few and hence high bargaining power. There are only four suppliers for ATF (Aviation Turbine Fuel); IOC, Hindustan Petroleum Corporation, Bharat Petroleum and ONGC. Due to shortage of commercial aircraft pilots in India the supply of pilots is concentrated, hence increasing their

PORTERS 5 FORCES..

Bargaining power of buyers

Large number of buyers and highly fragmented lowering their power Low switching costs
Differentiating strategy fails due to more or less homogeneous service. Suppliers of aircraft are the same- Boeing or Airbus. Switching costs are low for low cost airlines and hence low brand loyalty. Air travel is preferred to save time and for convenience and hence no direct substitute

Competitive rivalry

Availability of substitutes

Key Success Factors

People

Products and Services

Route System

Revenue/Cost Control

Financial Management

Internal Analysis Resources & Capabilities

Tangible Resources Physical Resources Human Resources Technology Resource Financial Resource Intangible Resources Reputation Social capital Brand Awareness Employee Relationship

Internal Analysis - Low Cost Leadership

Financial Health

Low-Fare Flight

Cost Effectiveness

Operating on High Cash Flow Best low cost airline of secondary airport India & Central Asia Turnaround Fourth Indian low cost Low On-time flights carrier to operate Scored a hatrick at Time E-ticketing overseas SKYTRAX World Fewer employees per Airline Awards 2012 aircraft Profitable airline Always on time and Turnaround time for company in India than More seats per aircraft often Indigo is less Order of 180 new before time and leasing 30 minutes Selling aircrafts A-320 USD back plane 15 Billion No complimentary

meals

Value Chain
FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT - Financial Policy - Accounting - Regulatory Compliance - Legal - Community Affairs Flight, route and yield analyst training Pilot Training Baggage Handling Agent Safety Training Training Training In-flight Training

Computer Reservation System, In - flight System Product Baggage Tracking Development Flight Scheduling System, Yield Management System System Market Research

Information Technology Communications

Route Selection Ticket Passenger Service Counter System Operations Yield Management Gate System (Pricing) Operations Fuel Aircraft Flight Scheduling Operations Crew Scheduling On-board Facilities Planning Service Aircraft AcquisitionBaggage Handling Ticket Offices INBOUND OPERATIONS LOGISTICS Baggage System Flight Connections Rental Car and Hotel Reservation System

Promotion Lost Advertising Baggage Service Advantage Complaint Program Travel Agent Follow-up Programs Group Sales

OUTBOUND LOGISTICS

MARKETING AND SALES

SERVICE

Adapted with the permission of Michael E. Porter from Competitive Advantage: Creating and Sustaining Superior Performance, copyright 1985 by Michael E. Porter.

Competitive Strategies
1. Air craft management Indigo purchased the aircrafts, then sold them to intermediary and then hire the fleet on lease from then on contractual basis. Use single configuration aircraft. For maintenance, it allied with airbus Indigo preferred airbus over boeing as the fuel efficiency of the former is greater than the latter.

2. Growth and Expansion strategy

It adopted a strategy with one aircraft and adding one after six week. In other way is that they first tested one market and after establishing foothold in that market, they expanded to other markets. Shorter trajectory for landing. Does not require ground based navigation Helps in reduction of green house gas emission. Turnaround time is less Low frills Hub and spoke models for flights IndiGo preferred to wait and have a solid business plan in place. Its plan was to stick to operating a single configuration aircraft, providing point-to-point connectivity. IndiGo, however, continued its gradual expansion and waited for five years to launch its international operations, although, arguably, the airline had to wait those five years because of airline industry regulations. Still, it wasn't tempted to find loopholes to expand aggressively in

Tetra Threats
Threat of Imitation
Imitation of business model Economies of Scale Imitation of aircrafts Human Resource imitation-Cat 3 compliant pilots Cost Leadership rises threat of retaliation High Imitation Lag

Threat of Substitution
Railways Technological Advancement Premium Airlines like Air India, Jet Airways Either of the LCC like Spicejet, GoAir

Added Value Appropriated Value

Threat of Slack
Training Strikes Benchmarking Sustaining cost leadership by maintaining economies of scale and resources Payment Systemincentives

Threat of Hold Up
High power of aircraft suppliers- Boeing and Airbus Limited number of suppliers for ATF Government Interference High power of supplier of pilots due to shortage of pilots

Market Share and competitors share

Bibliography

www.centreforaviation.com www.goindigo.in www.livemint.com www.economictimes.indiatimes.com

THANK YOU