INDUSTRY ANALYSIS PROJECT

A REPORT ON AVIATION INDUSTRY ANALYSIS

INSTITUTE OF BUSINESS MANAGEMENT

AND RESEARCH
INTERNATIONAL BUSINESS SCHOOL
BANGALORE
AFFILIATED TO BHARATHIAR UNIVERSITY

2015-2017
BY
Halgeri Imtiyaz
Amar Walia
V.Gayathri
Abraham Davidson
Naveen Raj

CONTENTS
CHAPTER-1

INDUSTRY PROFILE
AN OVERVIEW OF AVIATION SECTOR
FACTORS INFLUENCING THE AVIATION
SECTOR
SIZE OF THE AVIATION SECTOR IN WORLD &
INDIA
EVOLUTION AND CONTRIBUTION OF INDIAN
AVIATION SECTOR
HISTORY OF AVIATION SECTOR
LIST OF MAJOR AIRLINES IN INDIA
VISION, MISSION,CORE VALUES AND
QUALITY POLICY OF AVIATION SECTOR

CHAPTER-2

COMPANY PROFILE
HISTORY OF THE COMPANY
VISION, MISSION AND BELIEFS OF INDIGO
COMPANY
REASONS FOR THE SUCCESS OF INDIGO

AIRLINES
SWOT ANALYSIS
COMPETITIVE RIVALRY OF INDIGO AIRLINES
AWARDS AND ACHIEVEMENTS
INDIAN AIR TRAVELS MARKET DOMINATED
BY INDIGO

CHAPTER -3

EXECUTIVE SUMMARY AND CONCLUSION

INDUSTRY PROFILE
AN OVERVIEW OF AVIATION SECTOR

Aviation industry is one among the most important industries

of any country because of its economic and social viability. The aviation
industry not only contributes to the Gross Domestic Product (GDP) of
the country and improves employment statistics, but also aids in
domestic and international trade, and facilitates many other businesses.
Socially the industry connects people to people leading to cultural
exchange and enhancement. Indian aviation industry has completed a
century of its existence and these 100 years have witnessed severe highs
and lows. On the one hand, there has been rise in the number of
companies competing in the industry along with a simultaneous growth
in the number of airline passengers; on the other hand the industry
players are still struggling against poor infrastructure and high operating
costs.
Today Hyderabad International Airport has been ranked amongst the
world's top five in the annual Airport Service Quality (ASQ) passenger
survey along with airports at Seoul, Singapore, Hong Kong and Beijing.
This airport in Hyderabad is managed by a public-private joint venture
consisting of the GMR Group, Malaysia Airports Holdings Berhad and
both the State Government of Andhra Pradesh and the Airports Authority
of India (AAI).

Indian Aviation industry is ninth largest in the world and is all

set to become third largest by 2020.It is one of the least penetrated air
markets in the world with 0.04 trips per capita per annum as compared
to 0.3 in China and more than 2 in the USA.Indian aviation is
experiencing dramatic growth across the board, from the emergence of
Low Cost
Carrier and growing middle class ready to travel by air as well as growth
in business and leisure travel. At present more than 85 international
airlines operate in India and 5 Indian carriers connect over 40 countries.
Total passenger traffic stood at a 190.1 million in FY15, registering an
Increase of 12.47%. By 2020, passenger traffic at Indian airports is
expected to increase to 421 million from 190.1 million in 2015.
Domestic passenger traffic expanded at a CAGR of 11.8% over FY06
15. It is expected to touch 209 million by FY17. International passenger
traffic posted a CAGR of 9.5% over FY06-15 and is set to touch 60
million by FY17. Looking at the current growth of 20% p.a, Indian
carriers plan to increase their fleet size to reach 800 aircrafts by 2020.
The Indian aviation sector is likely to see investments of USD 12.1
Billion during 2012-17;
USD 9.3 Billion is expected to come from the private sector. The
Government of India (GOI) envisions airport infrastructure investment
of US$ 11.4 billion under the Twelfth Five Year Plan (2012-17). It has
opened airport sector to private participation, six airports across major

cities are being developed under the PPP model. The Airports Authority
of India (AAI) aims to bring around 250 airports under operation across
the country by 2020. 100% FDI is permitted for greenfield airport
projects under the automatic route. Further up to 74% FDI is permitted
for existing airport projects under the automatic route and above 74%
and up to 100% permitted under government approval route. In last one
year aviation turbine fuel prices have declined owning to downfall in
crude prices. This was also the key reason for profit earnings of the
airline companies. It in turn provided for reduction in fares. Large scale
collaboration deals like, Etihad Airways & Jet Airways, Tata Group &
Singapore Airlines, Tata Group & AirAsia are providing a niche for
technology advancement and
Enhanced operational management.

The Indian aviation sector can be broadly divided into the following
main categories:
1. Scheduled air transport service includes domestic and
international airlines.
2. Non-scheduled air transport service consists of charter
operators and air taxi operators.
3. Air cargo service, which includes air transportation of
cargo and mail.
Scheduled air transport service: It is an air transport service
undertaken between two or more places and operated according to a
published timetable. It includes:
Domestic airlines, which provide scheduled flights within India and to
select international destinations. Air Deccan, Spice Jet, Kingfisher
Airline and Indigo are some of the domestic players in the industry.
International airlines operate from scheduled international air services to
and from India.
Non-scheduled air transport service: It is an air transport service other
than the scheduled one and may be on charter basis and/or nonscheduled basis. The operator is not permitted to publish time schedule
and issue tickets to passengers.
Air cargo services: It is an air transportation of cargo and mail. It may
be on scheduled or non-scheduled basis. These operations are to
destinations within India. For operation outside India, the operator has to

take specific permission of Directorate General of Civil Aviation

demonstrating his capacity for conducting such an operation.

FACTORS INFLUENCING THE AVIATION SECTOR

Thinking about airlines, the first thought which probably comes

to mind would be luxury and comfort. However, there is much more to
the airline industry than just that. Yes, most of the airlines worldwide are
facing a cycle of rising operating costs and declining profits and
margins. Now, passengers may not be able to observe these
characteristics, but after extensive research it is quite apparent the global
airline industry is in disarray.
So, what factors are affecting the industry? And more importantly, how
is the industry coping with them? Here is a PEST analysis for airline
industry to give you a better idea.

Political
The airline industry operates in a highly regulated political environment
where passengers are favored over the airlines. This is due to the fact
that passenger safety is paramount and the political establishment have
been made weary of the airlines and resorted towards strict regulations
for their operations, due to their earlier inclinations towards
monopolistic behavior. Furthermore, with there being more competition

in the industry and regulations in demand, passengers are in a position

where they can push for lower prices and amenities.

Economic
The 9/11 attacks left a major impact that the airline industry is yet to
recover from. The prolonged recession, fluctuations in oil prices and an
imminent global slowdown are other debilitating factors that are
affecting the growth of the airline industry. Airlines have to cope with
declining passengers, high fuel prices, competition from low-cost
airliners, labor demands and soaring operating and maintenance costs. In
addition, events such as the recent Malaysian airline disappearance, is
also adversely affecting the global airline industry.

Social
Over the years, the millennial generations emergence into the consumer
class has resulted in major social changes, more importantly in terms of
service, where consumers have become much more demanding.
Therefore, to meet the increasing demands of this segment, airlines have
to stabilize their costs. Additionally, the passenger profile has changed as
well with there being more economically minded passengers. When it
comes to business class passengers, improved communication facilities
have reduced the need to fly down for meetings.

Technological
With intense competition in the airline industry, latest technology must
be adapted by airliners in order to survive in the already tough
environment. Additionally, the use of latest technology in aircrafts would
not only lower fuel consumption, but also the cost of airline operations
and improve efficiency.

Conclusion
So, this PEST analysis for airline industry has highlighted four important
factors that are affecting its external macro environment. By keeping
these factors in mind, we have come to the conclusion that the increased
costs of doing business, strict rules and regulations imposed by
regulators, competition from low-cost airliners, changes in passenger
profile, in addition to the recent airline related deaths, all have affected
the viability and profitability of the global airline industry badly. It will
require a lot of patience and hard work for the industry to find its way
back to the right track.
SIZE OF THE AVIATION SECTOR IN THE WORLD AND INDIA
If aviation were a country, it would rank 21st in the world in terms
of gross domestic product (GDP), generating $606 billion of GDP per
year, considerably larger than some members of the G20 (and around the
same size as Switzerland).
By 2026, it is forecast that aviation will contribute $1 trillion to world
GDP.

Indias civil aviation industry is on a high-growth trajectory. India

aims to become the third-largest aviation market by 2020 and the largest
by 2030.
The Civil Aviation industry has ushered in a new era of expansion,
driven by factors such as low-cost carriers (LCCs), modern airports,
Foreign Direct Investment (FDI) in domestic airlines, advanced
information technology (IT) interventions and growing emphasis on
regional connectivity. India is the ninth-largest civil aviation market in
the world, with a market size of around US$ 16 billion.
The world is focused on Indian aviation from manufacturers,
tourism boards, airlines and global businesses to individual travellers,
shippers and businessmen. If we can find common purpose among all
stakeholders in Indian aviation, a bright future is at hand, said Mr. Tony
Tyler, Director General and CEO, International Air Transport
Association (IATA).
The Evolution and Contribution of Indian Aviation Industry
The Indian civil aviation industry came into existence way back in
1912. Tata were the pioneer with the introduction of first Indian airline
Tata Airline in the year 1932.

Since beginning, the industry has

witnessed ups and downs but in spite of that the Indian aviation industry
is one of the worlds fastest growing aviation industries. With only 9
airline carriers at the time of independence, the industry now has
numerous private operators which also include low-cost carriers making
air travel possible for the so-called common man. The Governments
efforts towards liberalization of the industry along with the change in
demographics of the country have supported a lot to this growth in the
industry. Today, the industry contributes around 0.5% to the Gross
Domestic Product (GDP) and employs some 1.7 million people. Other

than this direct contribution to the economy, the aviation industry also
contributes by facilitating domestic and international tourism thereby
improving the performance and contribution of tourism industry.
However the air travels penetration is very low in India and there is lot
of potential underlying the industry. The emergence of wide middle class
with rising disposable incomes has paved the way for industry players
marking a more promising future. One of the unique features of the
Indian psychology where air travel is not just a means of reaching to the
destination but is rather a means to portray economic superiority among
peers can be interpreted as a positive sign by the operators. There is a
glamour attached to air travel in addition to the benefits of saving the
travel time. The labor is cheap and is available in abundance in the
country. The only thing needed is training and polishing the human
resource to match to the industrys eligibility criteria.

2002-03: Moderately competitive landscape: In 2002-03, competition

in the domestic airlines industry was low with 2 players dominating the
Industry: Jet Airways and Indian airlines group (which comprised of Air
India, Alliance Air and Indian Airlines) together had 88 per cent market
share.
Sahara airlines also operated at this time and had a smaller share of the
overall domestic market. The players did not undercut each other on
ticket
Prices to grab market share and concentrated on profitability.
2006-07: Competition intensifies: Low-fare carriers (LFCs) forayed
into the industry, beginning with the launch of Air Deccan in 2003-04.

Subsequently, three more - Spice Jet, Go Air and Indigo - began

operations between 2005-06 and 2006-07. Two full-service carriers
(FSCs) -Kingfisher and Paramount - also entered the market in 2005-06.
Thus, the number of carriers in the domestic airlines industry trebled
from 3 in 2002-03 to 9 in 2006-07. LFCs offered tickets at much lower
prices as compared to FSCs and hence, managed to capture 42 per cent
of the domestic market share in 2006-07.
2007-08: Extremely competitive landscape: With competition rising
rapidly, the new entrants and incumbent players rapidly expanded their
fleet, in a bid to capture market share. The share of LFCs rose to 47 per
cent in 2007-08 from 42 per cent in 2006-07. However, this expansion
heavily eroded players profitability. Costs incurred by airlines on ATF,
manpower, etc, rose sharply, but companies were unable to hike fares
due to intense competition. This led to pressure on realizations, and
profit margins of most airlines slid into the red. The industry's combined
losses amounted to Rs49 billion in 2007-08. The capital structure of
most airlines deteriorated, while some carriers faced a liquidity crunch
and had to raise further debt to meet capital expenditure requirements.
The consolidation phase: Steadily increasing losses eroded the net
worth of airline companies, forcing financially weak companies to sell
out or
Merge with stronger companies. This led to consolidation in the
industry, wherein Jet Lite (erstwhile Air Sahara) was acquired by Jet

Airways, while Kingfisher bought Air Deccan. The government decided

to merge Indian Airlines with Air India to form a new entity, National
Aviation Company of India Limited (NACIL). The move was taken due
to the steadily mounting losses of Air India and Indian Airlines. As a
result of such consolidation, the market share of the top three players,
(NACIL, Jet Airways group and Kingfisher airlines) rose to around 70
per cent at the end of 2008-09.
2009-10: Growing market share of LFCs: LFCs such as Go Air,
Indigo and Spice Jet continued to gain market share by expanding their
fleet. As a Result, the share of the top three players (Jet Airways,
Kingfisher and NACIL) dropped to around 60 per cent in 2009-10. To
sustain and expand their market share, Jet Airways and Kingfisher
introduced low-fare operations under the Jet Connect and Kingfisher
Red brands, respectively. Jet Airways converted two-thirds of its seating
capacity to Jet Connect by the end of the second half of 2009-10.
Consequently, more airlines shifted to the LFC model from the FSC
model.
2010-11: PLFs touch record highs: Entry of LFCs, higher household
income, strong economic growth, surging tourist inflow, increased air
cargo movement, sustained business growth and supportive government
policies were major drivers for the growth in the domestic aviation
industry in 2010-11.During the year, PLFs reached record highs due to
limited fleet addition and strong demand from business and leisure

travellers. Few efficient airlines with better operating cost structure and
financials turned profitable. The market share of the top three players
(Jet Airways+ Jet lite, Kingfisher and Indigo) in the industry was about
61 per cent in 2010-11. PLFs increased to 77 per cent in 2010-11 from
72 per cent in 2009-10.
2012-13: Pricing Discipline post kingfisher exit: The period saw a
marked decrease in passenger traffic due to ongoing economic
slowdown and high air fares. Kingfisher exited domestic operations
beginning in the 3rd quarter on account of its financial woes, leading to
about 13 per cent of total domestic capacity going out of market. The
remaining 6 players namely Indigo, Air India, Jet Airways, Jet lite, Spice
jet and Go air registered marginally better PLFs of 77 per cent and
higher realizations post kingfisher's exit. Indigo, Jet Group( Jet airways+
Jet Lite) and Spicejet together captured close to 73 per cent of the
domestic market.
2013-14: Deals and Discounts: The year saw discounting on ticket
prices during the peak seasons too. Overall, the both international and
domestic
Realizations declined during the year. Also, Abu Dhabi based Etihad
Airways bought 24 per cent minority stake in Jet Airways for Rs 20.6
billion during the year . As a part of the deal, Jet also sold three of its
flying slots at London's Heathrow Airport for a sum of USD 70 million
to Etihad. The entry of AirAsia India, a three-way venture between the

Malaysia-based low-cost airline, the Tata Group and investment firm

Telstra Trade place, in June 2014 is expected to further increase pricing
competition among existing LFCs. Another joint venture between Tata
Group and Singapore Airlines awaits operating permit which will further
intensify the competition in the industry.
HISTORY OF AVIATION SECTOR

India has a long history in the field of aviation. The operation of air
transport was entrusted to three Public Undertakings, namely Air India
for international services, Indian Airlines for domestic services and
services to neighboring countries, and Vayudoot. Hindustan Aeronautics
Limited: The Hindustan Aircraft (now Hindustan Aeronautics Limited),
was founded in 1940. It was started at Bangalore (now Bengaluru) as a
repair, overhauling and assemblage depot, has now grown into an
important manufacturing plant. It has designed and manufactured trainer
air-crafts. It belongs to the aerospace and defence industry. It is managed
by Ministry of Defence.

Timeline
1932: Tata Airlines (first commercial airlines of India) was
founded by J.R.D. Tata.
1946: Tata Airlines became Air India.
1953: Indian Airlines Corporation was established and to begin its
operation.
1981: Vayudoot was founded as a joint venture between Air India
and Indian Airlines.
1993: Vayudoot was merged into Indian Airlines in 1993.

1996: Alliance Air (now Air India regional) was formed as a

subsidiary of Indian Airlines.
2005: Indian Airlines was re-branded as Indian.
2006: InterGlobe Enterprises Limited (IGL) brand name is
Indigo
2011: Indian (formerly Indian Airlines) merged with Air India.
Post-merger, Alliance Air was renamed as Air India Regional.

List of Major Airlines in India

Sahara Airlines (now Jetkonnect) became operational in 1993. It

was founded in 1991.

Jet Airways began its operation in 1993.

Go Air started its operation in 2005.

Spice Jet became operational in 2005.

Indigo became operational in 2006.

Air Costa commenced scheduled operation in 2013.

Air Asia India commenced its operation in 2014.

Vistara (joint venture between Tata Sons and Singapore Airlines),

Fly Easy, TruJet, and Air Pegasus became operational in 2015.

VISION, MISSION, CORE VALUES & QUALITY POLICY

Our Vision:

Transworld Aviation to be the leading distributor and stockiest in the

aviation sector through strategic positioning in the supply chain.
Our Mission:
To become a global leader by providing a quality service and support in
parts distribution, MRO services, supply chain management and
solutions worldwide that exceeds the customer expectations.
Our Core Values:
Reliability: We take personal responsibility for our actions, so that our
customers can always depend on us. We promote workplace and
operation safety, quality and security through compliance with laws,
regulations and company policies. As individuals, our employees are
responsible and accountable for upholding the highest standards of
professional integrity. We treat everyone fairly and with trust and
respect.
Staying on Top of the Industry: We strive continually to keep pace with
the latest innovations. Constantly on the lookout for ways for effective
and

efficient

processes,

state

of

the

art

infrastructure,

fast

communication and highly skilled individuals to optimize customer

response with minimum lead time. We maintain an ethical and efficient
operating discipline.
One-Stop Shop: We offer a comprehensive array of services to meet our
customers' demand through flawless product and service delivery along
the entire supply chain.

We endeavor to exceed the expectations of our customers.

COMPANY PROFILE
CEO, Co-Founder
Rahul Bhatia

Co-Founder
Rakesh Gangwal

Headquarters: Gurgaon, Haryana

Parent organization: InterGlobe Enterprises
Website : http://www.goindigo.in
Founded : 2006

 HISTORY OF THE COMPANY

Early beginnings
IndiGo was set up in early 2006 by Rakesh Gangwal and Rahul Bhatia,
of Inter Globe Enterprises. Inter Globe holds 51.12% stake in IndiGo
and 48% is held by Caelum Investments, a Virginia, US based firm, run
by Rakesh Gangwal.
IndiGo placed a firm order of 100 Airbus A320-200 aircraft during June
2005 in plans to commence operations in mid2006. Former US Airways
Executive vice-President and Marketing and Planning Bruce Ashby
joined IndiGo as its Chief Executive Officer. The airline already
acquired parking lots for its brand new aircraft at both Mumbai and
Delhi airports. By the time they announced the first flight, they had
already scheduled their first 20 aircraft.
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 a 17.3% of the market share,
behind Kingfisher Airlines and Jet Airways.
Going international
Following Indian regulations, in January 2011 IndiGo received its
license to operate international flights upon completing five years of
operations.
IndiGo's first international service was launched between New Delhi and
Dubai on 1 September 2011. Over the following weeks, the international
services were expanded to serve Bangkok, Singapore, Muscat and
Kathmandu from New Delhi and Mumbai.
On February 15, 2012, the civil aviation ministry of India has lifted the
barriers on the carrier when was set over a year ago to defend the

sinking national flag carrier Air India from competition on the

International routes. The ministry announced that IndiGo's proposals to
fly to Dammam and Doha would get cleared immediately. IndiGo is
known to have applied for permission to fly to these two cities several
months ago and wasn't approved because of the barrier.
Rapid expansion
By early 2012, IndiGo had taken the delivery of its 50th aircraft in less
than 6 years.
IndiGo is known to have placed the largest order in commercial aviation
history during 2011, when Airbus won the US$ 15 billion deal for 180
aircraft. This deal pushed up the percentage of Airbus aircraft in India to
73%.
As of 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 the low cost model, buying only one type
of aircraft and keeping operational costs as low as possible along with
heavy emphasis on punctuality are said to be some of the reasons for its
success even when the airline industry in India is currently going
through a bad patch.
IndiGo focuses on adding a new plane every six weeks and sometimes
even faster. However, this rapid expansion had led to a scathing report
by the DGCA in December 2011, which highlighted problems in the
airline which could impact safety due to rapid expansion.
SriLankan Engineering, a subsidiary of the Sri Lankan flag carrier
SriLankan Airlines recently won the contract of performing heavy
maintenance checks on 26 of the 50 Airbus A320-200 operated by
IndiGo. SriLankan has been receiving contracts for the past 4 years to
perform maintenance checks on IndiGo aircraft. IndiGo is believed to
outsource its aircraft to SriLankan because of the unbearable tax
imposed on the local MRO providers making them unfavourable when
compared to the MRO providers in Sri Lanka.

 Vision, mission and beliefs of Indigo company

Our Mission

To inspire our customers and those they care about with life-enriching
products and experiences.
Our Vision

Making Connections. Creating Experiences.

Our Customer Promise

We exist to add a little joy to our customers lives, each time they
interact with us or our products.
Our Beliefs

Customer Engagement: We exist to add joy to our customers

lives when they interact with us and when they interact with our
products.

Customer Joy: Each and every person in the company should

understand how his or her work contributes to the creation of joyful
customer moments.

Respect: We owe to each other, irrespective of role or position, the

same level of respect and caring as we would show to a valued friend.

Teamwork: We have a responsibility to create an environment

where each individual is inspired to perform to the best of his or her
ability.

Passion: Passion creativity and innovation are the keys to

sustainable growth and profitability. Each individual working at
Indigo should reflect this in his or her work. Our role, as a company, is
to encourage and reward the demonstration of these attributes.

Community: We have a responsibility to give back to the

communities in which we operate.
Reasons for the success of Indigo Airlines

There are several reasons why Indigo is miles ahead of the other market
players.
1) Aggressive Fuel Price Hedging - This is one single reason which
saves millions for Indigo.
2) Supreme Service - They have a fleet which runs approximately
always on-time (90%). This not only makes their customers come back
for their next trip but also saves a lot on operational cost
3) Low advertising - Most of their advertisements are only on their own
in-flight magazines. They do not spend recklessly on advertising through
TV or large hoardings wooing customers.
4) Renting out its aircrafts - Indigo has a very robust maintenance team
which takes care of its aircrafts. The ones which are not flying are in
turn leased out to other airlines (both to domestic and international
players). This is another zone where Indigo makes good money.
There might be many other trade secrets which keeps Indigo topping at
the charts but end of the day its their attitude towards their customers as
well as their seriousness towards the service what matters. Clean seats,
cleaner toilets, courteous staffs, on-time flights and good city-to-city
connectivity makes a lot of difference to gain market share.
SWOT Analysis
Strengths
1. Strong backing Promoters and is one of the largest low cost
carriers in India
2. Only LCC to make consistent profits
3. It has one of the major airlines in India in terms of market share
4. LCC which has entered international markets has boosted its
brand value
5. Good advertising and marketing strategies have increased its
brand recall
Weaknesses
1. Not on too many routes as compared to competitors

2. Still has to establish itself on international destinations

Opportunities
1. Opening up of International routes
2. Largest Market share among LCCs in Indian Market
3. Middle Class taking to the skies
Threats
1. Plenty of new LCCs to compete with
2. Rising Labour costs and changing government policies
3. Rising Fuel Costs
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
suppliers 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 Spice Jet followed by Go Air. Below is
brief description about each of them:
Spice Jet
It is a low-cost airline based in New Delhi, India. Spice Jets
mission is to become Indias preferred low cost airline, delivering the
lowest air fares with the highest consumer value, to price sensitive
consumers. Its vision is to ensure that flying is no longer confined to

business travelers, but is affordable for everyone and thus the tagline
flying for everyone
Spice Jet airways began its operations in May 2005. Spice Jet 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. Spice Jets
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.
Go Air Airlines
It is owned by Wadia Group, is a low-cost budget airline based in
Mumbai, India. It has been showcased as The People's Airline. Go Air
is looking at 'commoditizing air travel' by offering airline seats at
marginally higher train prices to all cities in India. The Airlines theme
line is Experience the Difference and its objective is to offer its
passengers 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.

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)
Indian air travel market dominated by Indigo
The Indian air travel market is serviced by domestic and international
Low cost carries (LCCs) and full-service carriers (FSC). Domestic
carriers in India include LCCs like IndiGo, Spice Jet, GoAir, Air India
Express and AirAsia India as well as FSCs like Jet Airways, Air India,
Air Costa, Alliance Air and Vistara. Indias relatively low per capita
income and price sensitive consumers have led LCCs to dominate the
countrys air travel market. LCCs share of the Indian air travel market
has increased from 40.5% in FY10 to 62.2% in FY15, according to
DGCA data. This represents 55% increase in LCCs market share over
FSCs market share over FY10-15.Among FSCs and LCCs, Indigo has
dominated the air travel market with a market share of 37.4% as on
August 2015 (up from 12.5% in FY09),followed by Jet Airways with a
market share of 22.1% in FY15 (down from 28.1% in FY09) and Air
India with a market share of 17.5%. Further, pending orders of 430
A320neos will help the company to grow its fleet at 11% CAGR over
the next seven years and maintain leadership in the Indian aviation
market.
Player-wise market share trend over FY09-15

Indigo (%)
Jet Airways
(%)
Air India Ltd.
(%)
Spice Jet (%)
Go Air (%)
Kingfisher
(%)
Others (%)
Total (%)

13
28

15 18
26 26

20
27

27
26

30
24

34
22

16

17 16

16

17

18.3

17

10
3
28

13 14
5
6
23 20

15
6
16

19
8
2

19
9
0

15
9
0

0
100

0
100

2
2
0
0
100 10 100 10
0
0

2
100

Indigo has high aircraft utilization and a lower turnaround time. The
company has also been a leader as far as on time performance is
concerned. Indigo has the least flight cancellation rate.
Exhibit
On time
5:
performance in FY15
90
85

87.5

Exhibit
Flight
6: cancellation rate in FY15
7

86.4
82.5

81

80.6

78.2

80

5.8

74.4

2.2

75

70

0.6

0.7

0.8

1.3

1.1

1.4

65

0
IndigoAir Costa Jet

Go AirAir Asia
Spice Jet
Air India

Airways

India

On time performance in FY15

IndigoAir Asia
Go Air Jet

Jetlite Air AirIndia

Spice Jet

Airways

Costa

Flight cancellation rate in FY15

CONCLUSION
Indigo has been able to remain profitable and grew its market share
since inception. However it is still a relatively young airline (6 yr. old).

It has to prove that low cost model can remain profitable in long run, just
like South West airline which has been operating as LCC since 40 yrs. It
has started international operations in September2011. The international
sector is a different ball game altogether. Indigo has to see how it can
compete in that sector with its existing business model.