GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
Indigo airlines case study
1. Case Study in International Business Strategy
Submitted by – BKC, Mumbai
Anurag Nagaria
Anil Agarwal
Joshil A. K.
Kedar Marathe
Nilesh Mashru
Tanmay Shah
Waris Imam
2. India’s fastest growing Domestic Airlines
Expected to take the top spot by 2015 as per
The Centre for Asia Pacific Aviation (CAPA)
21% of the domestic market share, behind the
combined low-cost and premium operations
of Jet Airways
India’s best On-time performance & least
flight cancellations
Highest load factor of 89.40%
IndiGo going International
3. 60 Million Passengers
Served – 90 Million
Domestic Passengers/ 20
Million International
Passengers
45 Million Tonnes of cargo
handled
Operations with 920
Airlines, @ 4200 Airports,
with 27000 Aircrafts
Inbound Air traffic from 87
Foreign countries
Outbound Air traffic to 40
countries
International Passengers
growing at CAGR of 14%
4. Rising income levels and
Attraction of foreign shores: profile:
demographic profile
Foreign Equity Allowed:
Domestic Airlines entitled to Highest % of Indian
49% Foreign Equity & 100%
go overseas after 5 years of Population in working age
NRI investment allowed.
domestic operations. group of 20-50 with high
earning potential
Growth in Indian Tourism Emergence of Low Cost
Industry:
Industry Airlines:
Airlines
Open Sky Policy between India Consumer preference shifting
& SAARC countries & increase to performance compared to
in bilaterals with EU & USA. glamour & luxury services
5. Entrants:
Threat of New Entrants
Suppliers:
Bargaining Power of Suppliers
Low product differentiation in basic services
Duopoly in Aircraft Market – Low bargaining
Low Switch Costs for Customers but high switch
power with Airlines
costs for Airlines
Switch cost to other suppliers is high
Open Sky Policy allows foreign Entrants
Shortage of Commercial Pilots in India
Very High Setup Costs
Limited Suppliers for ATF in India
Increasing Fuel prices
Scope for Suppliers to forward Integrate
Shortfall + High Cost of Skilled resources - Pilots
Rivalry:
Competitive Rivalry Buyers:
Bargaining Power of Buyers
Very little product differentiation in services High number of buyers fragmented – lowers
Mature Industry – Only Scope for growth by their power
gaining other player’s market share With high number of buyers, growth
High bargaining power of Suppliers opportunities are also high
No sense of brand loyalty amongst customers Switch costs are minimal for buyers
and can easily switch to other airlines No scope for backward Integration
Substitutes:
Availability of Substitutes
Indirect substitute are Railways – but not
powerful as Airlines score highly in the travel time
Travel by Airlines a Status symbol
However direct substitutes are other LCC – since
switch cost is low between airlines, threat of
substitutes is high
6. Threat of
New
Entrants
Availability Bargaining
of
Substitutes
Indian Power of
Suppliers
Aviation
Industry
Bargaining
Competitive
Power of
Rivalry
Buyers
7. JetLite
7.3%
Air India
17.9%
Jet Airways
21.9%
King Fisher Indigo
6.4% 21.9%
Spice Jet
Go Air
17.1%
7.5%
9. Emergence of the Great Indian middle class
willing to spend money for swifter travel
For the Individual on the Go,who values time
and on- timliness
Budget travel is not cheap travel, Quality of
Service
Mission Statement :
To be the best Airline in India by providing the following
values to the customer:
- Affordable Fares
- Ontime performance
- Hasslefree Service
10. Strengths Weaknesses Opportunities Threats
•Business Model •Less •Freight market •High ATF prices
•High Brand Differentiation •Increased •Increasing Labour
Awarness •Too many players Domestic Air Costs
•Cost Leadership •Short lived traffic •Competitors &
•High Efficiency innovations •International Increasing online
•Innovation •Untapped Markets ticket reservations
•Age of Equipment domestic cargo •Chartered services •Economic
segment •Regional Slowdown
•Tie Ups
•No Established connectivity •Poaching
•Continuous
Alliances •Airport •Government
Improvements
•Lack of Product upgradation policies
•Debt Free
Depth & Breadth •Pressure on •Scarcity of pilots
•Image
Established •Cost inflation
Carriers like
Kingfisher & Air
India
11. Fastest Growing Domestic Airline Co.
o Youngest Domestic Airline Co
o When IndiGo entered the arena they had to compete
with mature competitors; recession world-over &
spiraling costs due to sharp increase in crude oil
prices
Only Airline co. to make a profit
Growing market share (No. 2 currently)
“Indigo Airlines has been one of the airlines
which has been eating away market share from
its competitors”
12. IndiGo has won the following awards for its excellent service
across the Indian airspace-
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)
Safety Excellence Award by Rajiv Gandhi International Airport
(2009)
Most Admired Travel Product of the Year 2009 by SATTE
(2010)
Best Domestic Low Cost Service Airline for the Year 2010 by
Travel Agents Association of India (TAAI) (2010)
Safety Excellence Award by BIAL (2010)
Skytrax Central Asia's best low-cost airline award (2011)
13. •Turnaround Time •Limited Passenger service •Avoiding in-flight services
•Aircraft Utilization •Low price tickets •No free meals
•On-time performance for •Point to Point routes •Strategic usage of disposable
time-sensitive travelers •Frequent & Reliable departures bags for quick cleaning of
•Young fleet of aircraft (hence •Targeting high load factor aircrafts before landing
less maintenance issues) •Highest no. of seats
•Lower Employees per Aircraft •Light weight Seats
•Fuel Efficient Engine
•Zero Inventory of components •Internet Reservations
•Low turnaround Times •Cost & Service Culture
•Same Configuration of all •Human Resource Training on
Aircrafts providing flexibility Efficient processes
in allocation • Centralized Operations
controls Centre
•Highest no. of CAT-III
compliant Pilots
Operational Cost Leadership
Positioning
Efficiency & Competencies
14. Limited No
Connections
No Meals Passenger
with other
Service airlines
IndiGo the
16 min No-Frills
Airline
gate
Frequent & Turnaround
Point to
Reliable
Point routes
Departures
Highly
Low Ticket
Productive Standard Prices
Crew Fleet of
Trained
Pilots A320
Limited
Highly
Internet use of
Skilled Regular High Aircraft
Ticket Travel
Crew Training Utilizations
booking Agent
15. People for
Cargo Services
Buisness travel People for
Business travel
Leisure
Charter Leisure travel/Holiday
Airways travel/Holiday
16. Costly to Easy to
Resources Value
Imitate substitute
Aircrafts High No No
Human
High No No
Resources
Brand Equity High Yes No
Social Capital High Yes No
Employee
High No No
relationship
Fuel High No No
17. One type of airplane -
brand-new Airbus A320s
One type of fare - low
One type of customer
service - professional
One type of route - serving
destinations within India
One way to deal with delays
and cancellations –
honestly
18. Be visible – go all out
to project yourself as
the Future Market
Leader
Go Local – Connect
with the Middle class
Focus on your Core
Competencies and
market them
Aim to compete with
Railways in the long
run
Synergies in offering
value added services –
Holiday packages/
Visa Services
19. Market Penetration &
Differentiation
More than 15 Within 14 days of With in 7 days of
Low Cost And High days prior to Travel travel
Quality of Service travel
•The Base fare •The base fare
Price to be differentiated •With other could upto reach could reach upto
with respect to days fixed, Base upto 1500s 4500
before the travel. fare would vary
High seating density and 101-501
load factor.
No frills such as ‘free’
food/drinks or lounges
Targeting segments
locally based on seasons
and festivals
Recently launched EMI
options for consumers
thereby expanding the
potential customer base
20. Communication Advertisement
Objectives Strategy
On-time
performance Airport Hoardings
Affordable fares Social Media
Hassle free Collaboration with
passenger Mutliplexes
experience. Magazines
Sponsoring Events
Collaboration wish
banks/ credit card
cos./ hotels/
websites
Use of Regional
Languages
21.
22. Constant improvement in operational efficiency is necessary to
achieve superior profitability, however it is not usually sufficient
Companies can compete successfully based on basis of Operational
effectiveness, however staying ahead of rivals gets harder day-by-
day
The most obvious reason is rapid diffusion of best practices
Competitors can quickly imitate with the help of outside consultants
or hiring managers from the leader
Management techniques
New technologies
Input improvements
Superior ways of meeting customer needs
“Any competitor can imitate any other airlines activities. Any
airline can buy the same planes, hire same people, train the
same way and match the menus and ticketing offered by
other airlines”
23. IndiGo has the potential to become a global low-cost carrier,
provided it can tide over the current slowdown.
If it has the cash to sustain itself for another two years, IndiGo surely
will be one of the big players in the low-cost space globally with its
expected fleet size of about 100 planes by 2016.
At the moment, little is known about IndiGo's financial health
because it is not listed on the stock exchanges and, therefore, does
not have to put its profit and loss statement in the public domain
every quarter, though it is certain the company is in the red like all
other Indian carriers.
IndiGo has hardly advertised and indulged in brand building
activities. Its fast growth has been solely due to word of mouth and
repeat customers.
They should indulge in brand building exercises.
24. S-O Strategies W-O Strategies
Introduce continuous learning program Expand to International markets
Create a shared services program with
Pursue market growth opportunity
competitors
Develop marketing strategy to focus on Target competitor Pilots (Kingfisher; Air
time-conscious business travelers India)
Improve Operational efficiency and shift
the productivity frontier outward to
make it increasingly difficult for the
competitor to copy
S-T Strategies W-T Strategies
Create a Pilot training program for CAT-
Defer Delivery of New Aircraft
III pilots
Continue to successfully hedge fuel
prices by importing
Focus on Employee retention
Develop promotional schemes to tempt
consumers procure tickets from the
Airline website directly to avoid
competition from other low-fare airline
25. 2000 Airlines
23000 Aircrafts
3700 Airports
Avg Growth of 5%
p.a. for past 30
years
2015:
Expected Growth from 2010 to 2015
Total Revenue – US Revenues – 42.2% to reach US $ 714
$598 Billion @ 0.7% Billion
margin of US $ 4 Passenger Volume – 28.4% to reach 3
Billion Billion
26. Parameters Domestic Flights International Flights
License Fee Lower Higher
Procedural Hassles Lower & easier Higher & costlier
Training Charges Lower Higher
Crew Members Domestic Level World class and costlier
Ground Staff All of host country
Different types of All seats may be Economy Class At least Business Class required along with
seat in low cost carrier Economy
In flight meals Not mandatory in low cost In International Flights courtesy demands so
airlines
Turn around time Easily manageable Difficult as mandatory fumigations, cleaning after
meals and washroom upkeep required.
Customised meals need to be arranged.
Check-in time Lesser as majority are locals Documentation takes time as passengers are of
various nationalities
Customer Loyalty Low High
Loyalty Programmes Solely Domestic Airlines do not Loyalty and FF Rewards make it difficult for
have any such programmes passengers to switch choice of carriers. Especially
after formation of alliances
Mindset Domestic Global
Culture Domestic Have to take care of cultures of people especially
in respective flight sectors
Reading Material Fewer, easily and quickly Care needs to be taken to provide materials in
available various languages according to passenger mix
Language spoken by National Language Care needs to be taken to ensure that at least one
crew members of the crew member can understand customer
language.
Customer Priority Cost Safety & Reliability
Size of Aircraft Carriers are smaller but usually Larger size makes the flight more economical due
operate at full capacity. to higher no. of seats Usually International flights
are Airbus or Boeing
28. Strengths Weaknesses Opportunities Threats
•Domestic Success •Lack of Experience •47 countries with •High ATF prices
•Business Model •Less Inbound but no •Increasing Labour
•High Brand Differentiation outbound from Costs
Awarness •Short lived India •Existing Players –
•Cost Leadership innovations •Freight market Intense Rivalry
•High Efficiency •No Established •Gaining share of •Global dynamics
Alliances LCCs •Poaching
•Innovation
•Billing systems •Chartered services •Government
•Age of Equipment
•Tie Ups •Lack of Product policies
Depth & Breadth •Scarcity of pilots
•Continuous
Improvements •In Flight Services &
availability of
•Image
business class
seats
29. S-O Strategies W-O Strategies
Sell tickets in local currency to hedge against the
Introduce learning program for new destinations
currency fluctuation
Pursue market growth opportunities in Countries with Focus on M&A in international sky to take benefit of
Inbound but no Outbound travel Scope
Develop marketing strategy to focus on Indian Middle
Loyalty & FF Rewards & Other Customer Retention
class travelers by offering International holiday
Programs
packages in countries promoting high tourism
Continue Focus on On Time Performance & Load factory
maximization
Raise Debt to grow Infrastructure & Balance capital
portfolio
Adopt Regional Strategies & Culture
S-T Strategies W-T Strategies
Create a Tie-up with other LCC’s players like Air Arabia,
Focus on Employee retention Air Asia for the Indian customer base and exploit the
Economies of Scope by providing more locations
Offer Business Class Seats & In flight services while
Continue to successfully hedge fuel prices by importing
focusing on cost optimization
Leverage Economies of Scale
