CASE ANALYSIS REPORT

The IndiGo Story: “On Time, Hassle Free”

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.

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

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

Finance Planning &

Analy...
Vineet Mittal

CFO Treasurer
Riyaz Peermohammed Krishan Bhargava

Airport Operations
Sales Alphonso Dass
Sanjay Kumar

Flight Safety
Dhruv Rebbapragada

Administration
Shalini Singh

Ifly
Summi Sharma

Customer Services & Oper...

Sanjeev Ramdas

Corporate Affairs
Vikram Chona
CEO
Aditya Ghosh
Engineering
MoveIndiGo @ InterGlobe Enterpri...
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
 Current Market share of 41%
 On-time performance of 83.4%
 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 industries 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 India’s civil aviation

 Various DGCA actions impose frustrating operational and regulatory barriers

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

FEASIBLE ALTERNATIVES

1. Increase domestic operation

There are a number of initiatives taken up by government to encourage aviation industry,

e.g., promotion of regional air connectivity, Open Sky policy and policy of Greenfield
airports. In addition to this, government has also made plans for the development of airport
infrastructure. 35 airports have been selected for this purpose, of these 24 airports would be
taken up for city side development through PPP including maintenance and operation of the
terminal buildings, cargo operations and real estate development.
All these factors indicate towards a favorable environment for growth in the domestic
aviation sector. Hence it would be a wise option for IndiGo to increase its domestic
operations. IndiGo must increase the number of destinations and can start long haul aircrafts.

2. Extension

Currently, IndiGo is concentrating only in domestic passenger flights. However, the

freight/cargo market and charted plane service are the areas that can prove to be good
potential market for IndiGo. As per the reports from an economic survey this year, it was
stated that domestic cargo showed a growth of 9.3%. Besides, chartered flight services are
an untapped market for IndiGo. Thus, IndiGo has a huge opportunity to expand in both these
arenas.
FINAL RECOMMENDATION

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