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indigo airlines


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indigo airlines

  1. 1. Case study on Indigo airlines Environmental impact Presented by Vishnu g v Shirish s u Meghana manoj Raghu h g
  2. 2. INDIAN AVIATION INDUSTRY  The Indian aviation industry is one of the fastest growing aviation industries in the world.  India ranks fourth after US, China and Japan in terms of domestic passengers volume.  The domestic aviation sector is expected to grow at a rate of 9-10 per cent to reach a level of 150-180 million passengers by 2020.  Aviation Industry in India holds around 69% of the total share of the airlines traffic in the region of South Asia By 2020, Indian airports are estimated to handle: 100 million passengers Including 60 million domestic passengers Cargo in the range of 3.4 million tonnes per annum
  3. 3. Parent company-Inter Globe Enterprises Sector-Airlines Tagline/Slogan-Go India Segment-Cost Conscious Passenger Target group-Lower Middle class/Middle class Positioning-Low cost No frills Company information
  5. 5. INTRODUCTION • Indigo was set up in early 2006 by Rakesh S Gangwal,a USA-based NRI and Rahul Bhatia of InterGlobe Enterprises. • Indigo is a private, low-cost carrier based in Gurgaon,Haryana,India • The indigo airline started operation in August 2006 and currently is the largest airline in India by market share. • The airline is also one of the fastest growing airlines in the world • India’s best on time performance and least flight cancellations. • Indigo placed a firm order of 100Airbus A320-200 aircraft during june 2005 in plans to commence operation in mid-2006 Total domestic passengers carried by the scheduled domestic airlines between January and May 2013 were 25.998 million
  6. 6.  On august 2012,IndiGo become the largest airline in India in terms of market share(27%)  In August 2013,the centre for Asia Pacific Aviation ranked Indigo amongst the 10th biggest low cost carriers in the world.  IndiGo offers a premium service called IndiGo Plus, where the passengers, at a higher fare, can avail additional benefits like a pre-assigned seat and a complimentary meal on board. IndiGo focuses on adding a new plane every six weeks and sometimes even faster. It is a low cost carrier and the largest airline in India with a market share of 36.1% as of December 2014
  7. 7.  Indigo's stuck to its low-cost,  single class model unlike rivals Jet Airways.  Selling and leasing back planes helps its balance sheet  Quality and detail key to good service  It’s all about customer focus  Using technology smartly Why is the market leader? A d i t y a G h o s h , P r e s i d e n t R a h u l B h a t i a , M D
  8. 8. Financial highlights  Interglobe holds 51.12% stake in IndiGo and 48% is held by Gangwal’s Verginia-based company Caelum investments.  Net profit was 7.87 billion rupees(US Dollar 128 million)in the 2012-13  Revenue-Rupees 111.17 billion(US Dollar 1.7 billion)in 2014  Net income-Rupees 3.17 billion(US Dollar 50 million)in 2014  Sales of IndiGo, run by InterGlobe Aviation Ltd, grew 17.5% to Rs.11,117 crore for the fiscal year 2014 against Rs.9,458 crore in the previous year.  On 15 oct. 2014 , indigo agreed to purchase 250 A320neo aircraft worth US$25.7 BILLION .
  9. 9. Strategy  One type of airplane –brand-new Airbus A320  One type of fare-low  One type of customer services-professional  One way to deal with delays and cancellations-honesty  Go local-connect with the middle class  Focus on core competencies and market them  Aim to compete with Railways in the long run  Synergies in offering value added services-Holiday packages/visa services
  10. 10. Pricing strategies  Low cost and high quality of service  Price to be differentiated with respect to days before the travel.  High seating density and load factor  Being a low-cost carrier, none of Indigo's flights have Business class or First class sections. It offers only Economy class seating.  To keep fares low, Indigo does not provide complimentary meals in any of its flights, though it does have a buy-on board in flight meal programme.  Targeting segments locally based on seasons and festivals
  11. 11. STRATEGIC OBJECTIVES • Increase number of destinations / frequencies served resulting in market leadership • Top/ of the mind brand in indian aviation industry for AFFORDABLE QUALITY SERVICES • MARKET LEADER in terms of share in the travel industry • Introduce and sustain business travel segment for cost conscious and young professionals
  12. 12. Destinations  IndiGo operates to 37 destinations in India and abroad with 564 daily flights.  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. FINANCIALOBJECTIVES • Generate additional revenue • Target a PROFIT MARGIN growth of 2.5% - 3% p.a
  13. 13. MARKET SHARE
  14. 14. Competitors of Airlines
  15. 15. HOW INDIGO HAS ATTAINED THE HIGHEST PROFITABILITY ??? POWER OF CONCENTRATION  It operates on routes which have high traffic. Indigo has a fleet of 91 aircraft, it offers 564 daily flights connecting to 37 destinations including 5 international destinations.  Thus, IndiGo’s strategy is to provide more capacity on select routes, rather than spread itself thinly over several.  As each destination requires new investments (rentals, staff, ground-handling, equipment et cetera), this helps contain costs.
  16. 16. Keeping planes airborne as much as possible  Indigo understands that a plane generates revenue as long as it is in the air.  Indigo gets an aircraft ready for its next flight in 31 minutes compared to 35 minutes a few years ago.  This has helped the airline achieve its target of keeping the plane airborne for 12 hours a day, despite the fact that it has been getting new aircraft on a regular basis. OTHER FACTORS  VENDOR MANAGEMENT AND MANAGING FUEL COSTS.  Special training is given to the pilots such that they can reduce the fuel costs accordingly.
  17. 17. Threat of New Entrants Low Product differentiation in basic services Low Switch cost for Customers but high for airlines Open sky policy for foreign entrants Very high set-up costs Increasing fuel prices Shortfall + High cost of skilled resources- Pilots
  18. 18. Bargaining Power of Suppliers Duopoly in aircraft market Switch cost to other suppliers is high Shortage of Commercial Pilots in India Limited Suppliers of ATF in India
  19. 19. Competitive Rivalry Very little product differentiation in Services Mature Industry- Only scope for growth by gaining other people’s market share High bargaining power of suppliers No sense of brand royalty amongst customers and can easily switch to other airlines
  20. 20. Bargaining Power of Buyers High number of buyers fragmented- lowers their power With high number of buyers, growth opportunities are also high Availability of Substitutes Indirect Substitutes are railways- but not powerful as airlines, score highly in travel time However direct substitutes are other Low Cost Carriers –since switch cost is low, threat of substitutes is high
  21. 21. 1.Low fares 2.High Service Quality 3.Operational Efficiency 4.Customer Service 5.Fuel Efficient Aircrafts 6.High brand awareness 7.Flights are available to customers when required Strength
  22. 22. 1.Less differentiation 2.Short lived innovations 3.Untapped domestic cargo segment 4.No established alliances 5.Lack of product depth and breadth Weaknesses
  23. 23. 1.Increasing middle class population 2.Increase in domestic tourism 3.Chartered Services 4.An aviation consulting firm estimates the cargo services of 3.4million tonnes per annum. 5. Largest market share among LCCs in Indian Market Opportunity
  24. 24. 1.High ATF prices 2.Economic slowdown 3.Government policies 4.Technological advancement in communication 5.The shortage of trained pilots, co-pilots and ground staff is severely limiting the growth prospects of all the airline companies. Threats
  25. 25. Environmental impact  Comfortable and quick service  High speed  Easy access  Emergency services  Quick clearance  Most suitable for caring light goods of high value  National defense
  26. 26.  At Indigo, purpose is to improve the quality of life of the communities and serve.  3 key areas of focus of Indigo Reach:  Children & Education: primary focus is educating the young , providing employment opportunities to the youth  Environment: indigo is involved in activities at the local level to reduce carbon foot print  Women: Indigo is committed towards holistic development of the women in weaker sections of our society and help them become self-sufficient through education and employment related activities.
  27. 27. major CSR activities spearheaded by Indigo  Partnership with initiatives of Good Karma : “Save the Child”  Active involvement in the activities of various NGOs across India: NGOs including Angels, HCHW(Hyderabad Council of Human Welfare) etc.  Sustainable development of villages around a forest reserve:
  28. 28. Mobile: Online ticket booking, special assistance for minors, arranging wheelchairs, new mobile application for checking flight status, pre-booked seats and meals on flight Preemptive: Indigo placed the largest order in commercial history during 2011 with Airbus for 180 aircrafts, keeping in mind future competition Position: Tagline-‘On-time, Low Fares, Courteous, Hassle-Free, Low Cost Airlines’ Market Leader Strategy
  29. 29. Indigo's success can be attributed to certain things which has done differently as compared to others 1. Single type of airplane to reduce training and service cost 2. On time performance 3. High Passenger load factor – light weight , No. of seats increased. 4. One of the lowest Cancellation rate in industry 5. No frills such as free food/drinks, lounges 6.Emphasis on direct sale of ticket through Internet to avoid fee and commissions paid to travel agents. 7.Employees working in multiple roles. Key Success Factors
  30. 30. Awards and achievements  IndiGo has won the following awards:  Best LCC by the Airline Passengers Association of India (2007).  Best LCC at the Galileo Express Travel Awards (2008).  CNBC Awaaz's Travel Award for best low cost airline(2009).  Skytrax Awards – Best low cost carrier (2010, 11, 12.)
  31. 31. conclusion  Low cost airlines have huge potential in the Indian market there are many players entering the market targeting at price sensitive segment.  Open sky policy and deregulation have further open space for many players to enter the market.  Indigo has successfully implemented the low cost strategy with its value added services but still it has huge potential to capture more market if it can establish itself internationally , expand its service to the cargo .  It also has initiated various services to the society such as “indigo reach” is the CSR programme focus mainly on education, environment, and women.