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IIM-C AVIATION INDIGO

INDIGO CASE STUDY

Background:
When IndiGo entered the Indian skies on August 04, 2006, the market was filled with stalwarts in the aviation sector like Air
Deccan, Jet Airways, Kingfisher Airlines, SpiceJet, and Paramount Airways in the down south. Nobody gave IndiGo a
chance to last beyond 3 years. The fact that Jet had meanwhile swallowed Air Sahara didn't help, fuelling a competitive race
to be the biggest airline around, versus Kingfisher Airlines. Global developments at the time simply exposed the soft
underbelly of the airlines. Low-cost was considered low-quality of travel, thanks to Air Deccan's Re. 1 tickets. Then came
the 2008 global recession that worsened the fundamentals of the airline industry.
We have one of the youngest populations in the world that is highly productive, so the combination of these factors
complemented IndiGo's entry and growth in the market.
India is a huge country with over 1.2 billion people. Growing economy, growing middle class and their aspirations with
disposable income, make air travel as necessity rather than luxury. This requires a robust and efficient aviation system in
the country and that is where we saw an opportunity in the aviation space. With this IndiGo saw a huge potential for a
creditable airline with affordable fares, on time and hassle free travel.
IndiGo preferred to wait and have a solid business plan in place. The plan was to stick to operating a single configuration
aircraft, providing point-to-point connectivity. IndiGo launched with one aircraft and had a plan to add an aircraft every six
weeks, giving them enough time to stabilise. Furthermore, the plan also meant sticking to its low-frills airline identity where
meals and drinks were sold on-board and not given away for free.
IndiGo's growth plans have been consistent since its order of first 100 aircraft and its subsequent launch in 2006. The
growth is aimed at providing seamless travel to our customers at affordable fares. In the process of the expansion, IndiGo
will continue to develop connectivity both in terms of breadth and depth of service across the country.
Besides focusing on 6E's three core principles - On time performance, providing consistently low fares, and a courteous
and hassle-free travel experience, the airline will continue to tap the huge passenger traffic the Indian market has to offer in
the years to come. To meet the growing travel demand, IndiGo's fleet expansion remains intact. By 2015, 6E would
complete the delivery order of the 100 aircraft order placed in 2005. Thereafter, more airplanes shall be inducted into our
fleet between 2016 and 2025. (As a part of 180 aircraft deal with Airbus) Ordering more A320s was the natural choice to
meet India's growing flying needs. IndiGo went international because it could access markets within the aircraft range.
Singapore, Bangkok, Dubai, Kathmandu or Muscat are international destinations for which one crosses an international
border. But the model is the same, for eg: a Delhi-Dubai flight takes less time than a Delhi-Coimbatore and Kolkata-Bangkok
flight takes less time than a Kolkata-Ahmedabad flight.

Eco-friendly Engines:
IndiGo- the first airline in the world to get the brand new IAE (joint venture of Rolls Royce and Pratt & Whitney) engines
called Select One
6E committed to maintain low fares while reducing its impact on the environment through the use of green technology Pratt & Whitney PurePower PW1100G Engines for Airbus-320 NEO
Additionally, IndiGo has taken delivery of its first A320 aircraft equipped with Sharklet fuel saving wing tip devices,
becoming the first Indian carrier to do so. 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. This milestone
makes 6E the first airline globally to introduce on A320 aircraft powered by IAE engines. Sharklets are an option on newbuild A320 Family aircraft, and standard on all members of the A320neo Family. They offer the flexibility to A320 family
operators of either adding around 100 nautical miles more range or allowing increased payload capability of up to 450
kilograms. All future A320 aircraft to be delivered to IndiGo shall be fitted with the Sharklet wing tip devices.

INDIGO CASE STUDY

What's Happening in the Industry:

INDIGO CASE STUDY

About LCCs:
Successful low-cost carriers across the world - WestJet, Southwest, JetBlue, Ryanair, IndiGo, and others typically operate
narrow-bodied fleet that can fly within the 4-5 hour range. That makes the model successful.
In 2012-13, low-cost carriers put together were about 65 per cent of the Indian market - IndiGo, SpiceJet, GoAir, Jetlite put
together, with IndiGo leading the pack with a market share of 50 per cent of the LCC market.
India is one of the least penetrated aircraft markets in the world with only one commercial plane for every three million
Indians. Even countries like Indonesia and Philippines have three or four times the aircraft density of India. This leads to a
mismatch of supply and demand leading to high fares which are often beyond the reach of the common man.

Key Growth Drivers for LCCs:

The key growth driver for the Indian aviation including LCCs has been and will be in future the need for high quality low fare
travel. The economy and aviation industry both have a symbiotic relationship, so if India has to grow by 8-10 per cent then
the aviation market has to grow at just double that rate The key challenges are to keep the cost low & continue to offer lower
and affordable fares. India's ATF is costliest as compared to other countries in the similar economies, thereby putting an
additional burden to the overall cost. Airport charges & other related operating costs are an ongoing concern. Infact, INR has
depreciated almost by 25% against the USD during the last few quarters. So one key focus area will be to monitor our cost
carefully and offer affordable fares regularly.
It is so ironic that despite having a population of 1.25 billion, the percentage of skilled manpower is very low. Manpower
skills are required across fields in our business, pilots, aircraft engineers, flight attendants as well as HR, finance and legal

INDIGO CASE STUDY

professionals who understand aviation. High-quality training institutes and methodology are the need of the hour. It is also
important to encourage and financially reward airlines, airports, cargo operators and MROs those that create new job
opportunities.

About IndiGo:
IndiGo is India's largest airline with a market share of 29.5 per cent as of June, 2013 as well as the country's largest low-fare
carrier. IndiGo is the fastest growing low cost carrier in the world (source: CAPA). IndiGo has a simple philosophy offer
fares that are always low, flights that are on time, and a courteous, hassle-free travel experience. IndiGo's On-Time
Performance is one of the best in India (95.2 per cent, as of June 2013). IndiGo's Technical Dispatch Reliability is 99.91%
making it the airline with the least number of cancellations in India. With its fleet of 66 new Airbus A320 aircraft, the airline
offers 422 daily flights connecting 34 destinations - Agartala, Ahmedabad, Bangkok, Bengaluru, Bhubaneswar,
Coimbatore, Chennai, Delhi, Dibrugarh, Dubai, Goa, Guwahati, Hyderabad, Imphal, Indore, Jaipur, Jammu, Kathmandu,
Kochi, Kolkata, Lucknow, Mumbai, Muscat, Nagpur, Patna, Pune, Raipur, Ranchi, Singapore, Srinagar, Trivandrum,
Vadodara, Vishakhapatnam, and Chandigarh. IndiGo currently operates international flights to 5 destinations, namely,
Bangkok, Dubai, Kathmandu, Muscat and Singapore. The first international flight commenced on September 01, 2011.
As the youngest, yet fastest growing airline in India, IndiGo has flown over 57 million passengers in seven years. IndiGo is
led by its President, Aditya Ghosh and is promoted by InterGlobe Enterprises and Mr. Rakesh Gangwal, an aviation industry
veteran and entrepreneur. InterGlobe Enterprises is a leader in aviation and travel related services growing the market
through innovation and service leadership. We build businesses and represent global brands that deliver quality and value.
Established in 1989 with headquarters in Gurgaon today InterGlobe has a network of 126 offices across 59 cities globally.
InterGlobe employs more than 11,000 professionals across its businesses which include IndiGo (InterGlobe Aviation)
InterGlobe Technologies InterGlobe Air Transport InterGlobe Technology Quotient InterGlobe Hotels, InterGlobe Retail, and
InterGlobe Established.

The LIME Challenge:

1. Develop a detailed marketing strategy for launch and expansion of IndiGo in the international markets ensuring IndiGo's
dominance in the market 10 years from now.
2. Where is the IndiGo brand in the consumers mind? Where should it aim to move towards, keeping the competitive (both
current and future) and scape in mind.
3. The Indian air travel market is divided across various segments like Corporate, SME, leisure, VFR, student, etc. Analyse
each segment. How should IndiGo approach each segment in order to position itself in a differentiated manner vis--vis
other competitors to become the airline of choice in the chosen segment(s). What should IndiGo's customer
segmentation strategy be? Which segments should it choose to focus on and how?
4. How should IndiGo's product strategy evolve to meet the objective, again keeping the competitive landscape in mind?

Mentor:
Mr. R. Srikrishna, Director - Product Management and Sales Support r.srikrishna@goindigo.in