STRATEGIC PROFILE OF

INDIGO

SUBMITTED BY:
SEC- B | GROUP E

ALIYASMIN RAHAMAN (61)

KANUPRIYA KAUSHAL (95)
YASH KEJRIWAL (110)
 ABOUT INDIGO
IndiGo is India’s largest passenger airline with a market share of 47.5% as on December, 2019. They primarily
operate in India’s domestic air travel market as a low-cost carrier with focus on their three pillars – offering low
fares, being on-time and delivering a courteous and hassle-free experience. IndiGo has become synonymous
with being on-time.
It is also the largest individual Asian low-cost carrier in terms of jet fleet size and passengers carried, and
the sixth largest carrier in Asia with over 64 million passengers carried in financial year 2018–19. The airline
operates 1500 flights every day to 87 destinations – 63 domestic and 24 internationals. It has its primary hub
at Indira Gandhi International Airport, Delhi.
The airline was founded as a private company by Rahul Bhatia of InterGlobe Enterprises and Rakesh Gangwal,
a United States-based expatriate Indian in 2006. It took delivery of its first aircraft in July 2006 and commenced
operations a month later. The airline became the largest Indian carrier by passenger market share in 2012. The
company went public in November 2015.
Being a low-cost carrier, IndiGo offers only economy class seating. To keep fares low, IndiGo does not provide
complimentary meals on any of its flights, though it does have a buy-on board in-flight meal programme. No in-
flight entertainment is available. Hello 6E, the in-flight magazine published by IndiGo, is available for
passengers to read. IndiGo offers premium services, such as a pre-assigned seat, multiple cancellations and
priority check-in, to its passengers who are willing to pay a higher fare. In September 2019, the company
announced its tie up with SonyLIV on demand video app for providing its fliers with entertainment options at
the airport and in flight.

IndiGo has been attracting consumers with its low-cost and on time flights. It has India’s best on-time
performance and least flight cancellation.

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Indigo Fleet

IndiGo placed an order for 100 Airbus A320-200 aircraft worth US$6 billion in June 2005 during the Paris Air
Show with plans to commence operations in mid-2006. The airline received its first A320 in July 2006 and
planned to induct 100 aircraft by 2015–2016. IndiGo signed a memorandum of understanding for an additional
180 Airbus A320 aircraft including 150 with the New Engine Option (NEO) worth US$15 billion on 11 January
2011. In 2012, the airline took delivery of its 50th aircraft and the 100th aircraft was delivered on 4 November
2014, completing its initial order ahead of schedule.
The Airbus A320neo family aircraft ordered in 2011 were to be delivered starting 2015. However, due to a
delay in the production and delivery of these aircraft, IndiGo dry-leased a total of 22 used aircraft to cope with
the demand. On 15 October 2014, IndiGo expressed its intention to order a further 250 A320neo aircraft worth
US$25.7 billion at list prices. On 15 August 2015, IndiGo confirmed the order for 250 A320neo aircraft for
$26.5 billion. The order also provides IndiGo the flexibility to convert some A320neos to A321neoLRs that can
seat more passengers and fly on longer routes. The order for 250 jets was Airbus' single largest order by number
of aircraft. IndiGo received the first A320neo in March 2016. On 10 October 2019, Airbus delivered its 1000th
A320neo aircraft to Indigo. On 29 October 2019, IndiGo placed a firm order for 300 A320neo Family aircraft
comprising a mix of A320neo, A321neoLR and A321XLR aircraft, taking IndiGo's total number of A320neo
Family aircraft orders to 730. Airbus monthly reports lists the 300 order as 87 A320neo and 213
A321neoLR/A321XLR.
IndiGo took delivery of its first ATR 72-600 in November 2017. As of 31 December 2019, the airline has more
than 250 aircraft in its fleet, being the first Indian airline to achieve this record.

Aircraft In Service Orders Passengers Notes

Airbus A320-200 124 NIL 180  
180
Airbus A320neo 96 236 Largest Operator
86
Airbus A321neo 11 388 222  
ATR 72-600 25 25 74  
Total 256 649  

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 PEST ANALYSIS
Political Factors that Impact Indigo Airlines

 Threat of Terrorist Attacks – We believe in the world of post 9/11, corporations such as Indigo
Aviation have to live with operating under the shadow of a terrorist attack. The prudent policy should be
to take insurance and other types of hedging instruments to mitigate the losses occurring because of the
terrorist attacks.

 Democracy & Other Democratic Institutions – According to Arpita Agnihotri, Saurabh Bhattacharya
the democratic institutions are needed to be strengthened further so that business such as Indigo
Aviation can thrive in an open, transparent and stable political environment. Strengthening of
democratic institution will foster greater transparency and reduce the level of corruption in the country.

 Likelihood of Entering into an Armed Conflict – From the information in the Indigo Airlines case
study, I don’t think there is a likelihood of country entering into an armed conflict with a neighbouring
country.

 Regulatory Practices - The regulatory practices are streamlined with global norms which have helped
the country to improve its “ease of doing business” ranking.

 Role Local Governments Play – Local governments are highly influential in the policy making process
and implementation as most of the policies and regulations are implemented by the local government as
enforcement agencies mostly report to local government in their own states regarding various laws.

 Government Regulations and Deregulations – The government is adhering to all the rules and
regulations under World Trade Organization norms. There is consistency in both policy making and
implementations of those policies

Economic Factors that Impact Indigo Airlines

 Price Fluctuations in both Local and International Markets – Compare to the level of quantitative
easing in last decade the prices of Indigo Aviation products and prices of overall products have remained
sticky in the US market. Indigo Aviation should consider the fact that at deficit levels of United States in
an emerging economy can lead to rampant inflation and serious risks of currency depreciation.

 Government Spending – As mentioned in the political factors, government of the country is running
deficit budgets. The implication for Indigo Aviation is that it can boost sales of its product in short run
but also expose Indigo Aviation to medium term forex and currency depreciation risks.

 Fiscal and Monetary Policies – The Republican government tax break culture has increased the deficit
and it can lead to fiscal trouble for the economy in coming years.

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 Employment Rate – If the employment rate is high then it will impact Indigo Aviation strategies in two
ways – it will provide enough customers for Indigo Aviation products, and secondly it will make it
expensive for Indigo Aviation to hire talented & skilful employees.

 Inflation Rate – The inflation rate can impact the demand of Indigo Aviation products. Higher inflation
may require Indigo Aviation to continuously increase prices in line of inflation which could lead to
lower levels brand loyalty and constant endeavours to manage costs. Cost Based Pricing could be a bad
strategy under such conditions.

Social Factors that Impact- Indigo Airlines

 Gender Composition in Labour Market Indigo Aviation can use gender composition of labour market
to understand the level of liberal nature of the society, women rights, and women’s say in matter of
societal issues and consumption decisions. The gender composition of labour market is a good indicator
of disposal income of household, priorities of the households, and related needs.

 Demographic Trend – The demographic trend is one of the key factors in demand forecasting of an
economy. For example, as the population of USA and EU is growing old the demand for products
mostly catering to this segment will grow. Indigo Aviation should consider demographic trends before
new product developments and integrate features that cater to this segment. As population is ageing it
will require less tech intensive products.

 Attitude towards Authority – Various cultures in different part of the world have different attitude
towards authority. In Asia authority is respected while in west it is something to rebel against. Indigo
Aviation should carefully analyse the attitude towards authority before launching a marketing campaign
for its products and services.

 Societal Norms and Hierarchy – What sort of hierarchy and norms are acceptable in society also
influence the types and level of consumption in a society. In highly hierarchical societies the power of
decision making often reside at the top

 Attitude towards Leisure – Indigo Aviation should conduct an ethnographic research to understand
both attitude towards leisure activities and choice of leisure activities. Experience economy is one of the
fastest growing segments both among millennials and among baby-boomers.

Technological Factors that Impact Indigo Airlines

 Preparedness for 5G Related Infrastructure – Countries across the world are trying to prepare themselves
to install 5G infrastructure. Indigo Aviation should assess to what level the local market is prepared to
roll out the 5G connectivity.

 Research and Development Investment Levels – If there is high level of investment in technology
development sector then there are high chances of building a self-sustaining ecosystem that drives
innovation. Indigo Aviation can leverage such a situation to hire the best people in business.

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  Acceptance of Mobile Payments and Fintech Services – One of the areas where US are lacking behind
China is Mobile Payments. Indigo Aviation should assess what are preferred choice of mobile payments
in local economy and chose the business model based on it.

 Technology transfer and licensing issues for Indigo Aviation – laws and culture of licensing of IPR and
other digital assets should be analysed carefully so that Indigo Aviation can avoid shakedowns and IPR
thefts.

 Mobile Phone & Internet Penetration – Indigo Aviation should assess the level of internet and mobile
phone penetration in the country as it will it in building a requisite business model based on local needs
and realities.

 Level of Acceptance of Technology in the Society – Indigo Aviation has to figure out the level of
technology acceptance in the society before launching new products. Often companies enter the arena
without requisite infrastructure to support the technology-oriented model.

 E-Commerce & Related Infrastructure Development – As E-Commerce is critical for Indigo Aviation
business model. It should evaluate the e-commerce infrastructure, technology infrastructure etc before
entering a new market.

TOWS ANALYSIS

OPPORTUNITIES
THREATS:

• Rising Aviation turbine fuel price

• Fast growing air freight market
• Increasing Competition
• Chartered flight service
• Scarcity of trained personnel
• Venture into international market

• Airport infrastructure development

Strengths:
• High Brand awareness and brand quality
• On-time arrivals
• Tie-up across value chains to provide value added services
Weakness:
• Lack of differentiating factors from competitors
• Absent in fast growing air-freight market
• Negligible presence in International market

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SO Strategies:
• Expansion of domestic destinations covered and aim market leader position
• Build strategies to grab the low cost growing domestic market
ST Strategies:
• Build Pilot training centers with govt. assistance
• Enter into long term agreement to procure fuel
WO Strategies:
• Optimize the utilization ratio by tapping air freight market
• Increase presence in South-East Asia, Middle East, venture into European Market
WT Strategies:
• Customer centric innovation of value-added services to differentiate from competitors

BUSINESS MODEL CANVAS

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 Strategic Review & Recommendation

Operational Strategies:
• Single Type of Aircraft: Indigo’s whole fleet consists of A-320-232 aircraft, which gives them a greater
flexibility.
• Single Class: Having only economy class gives Indigo the privilege not to spend time, money and crew
on privileged customers.
• Low Average Fleet Age: Average age of Indigo is less than 3 years, which indicates less maintenance
cost.
Marketing Strategies:
• High reliance on word-of-mouth in its early days by reputation of no-frills airlines
• Indigo advertised heavily when it started international operations.
Financial Strategies:
• Indigo has gone on round to say that the company has practically no debt.
• Indigo has been better doing leverage on business using the financial instrument like Sale and Lease
back opportunities.
Corporate Level Strategies:
• Indigo is creating blue ocean strategies using features like “Check-In-Countries” for passengers with
only cabin baggage so that they don’t need to wait in lines.

Recommendation:
1. Increase number of destinations served
2. Offer low priced corporate travel packages
3. Offer red eye flights
4. Introduce Air-cargo service
5. Offer flights to unserved destinations with tie ups through FSC

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Sources:

https://en.wikipedia.org/wiki/IndiGo
https://www.goindigo.in/aboutus
https://twitter.com/IndiGo6E?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor

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