Case Analysis: Indigo And Its Battle For Profits
Indigo and its Battle for Profits
Tuhina Kumar
3098
T. Y. - B
Introduction
Indigo airline has revolutionized the air industry with low fares by adopting a completely different way of working. It has ditched expensive overheads like free food and drink, uses only the same type of airplanes to minimize maintenance, training and repair costs, being in air most of the time avoiding high landing fees and nearly always being on time, Indigo has made the lives of many customers very convenient.
The large aircraft orders, phasing out of aircrafts older than six years and Indigo's highly connected flight network to which a new destination is not added unless it can be connected to at least two other destinations points out to a highly planned long …show more content…
In contrast, Spicejet has 58 planes but it flies to 46 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 (Ramki). It also has a fast turnaround time and takes only 31 minutes to unload, clean, restock the plane, and board another flight full of passengers. An airline is charged for the duration its aircraft stays at the airport. Having a single make of aircraft again helps in this regard as the time taken by the crew gets optimized. Also the Average Stage length (flying time per flight) of one and half hours, which means not having to stock and serve hot meals in most flights. This again contributes to the low turnaround time. They also have a fleet which runs approximately always on-time (90 per cent) (Ramki). This not only makes their customers come back for their next trip but also saves a lot on operational …show more content…
Due to this, Indigo economises on airport charges, by parking for a lesser time, as its planes stay in the air for a longer time. This also relives the customers of the hassle of shifting to different planes while taking a connecting flight. This results in “a high aircraft utilization rate of more than 11.5 hours per day per plane” (Airlines in India: How is Indigo Different from other airlines and how has it been able to churn profits., 2014). Its cost-consciousness is reflected in the fact that it will not go to a new destination until it can fly from there to at least four different cities and amortise costs (Phadnis, 2013). This requires deft planning. “It also helps to capture the local market better” (Phadnis, 2013). For instance, Indigo has connecting flights from Indore to Delhi, Pune, Mumbai and Kolkata and is planning on adding Bangalore and Chennai too. This strategy makes certain that they have loyal customers who will have the choice to travel to all these places by Indigo. It thus builds reliability, getting a larger market share from
Tuhina Kumar
3098
T. Y. - B
Introduction
Indigo airline has revolutionized the air industry with low fares by adopting a completely different way of working. It has ditched expensive overheads like free food and drink, uses only the same type of airplanes to minimize maintenance, training and repair costs, being in air most of the time avoiding high landing fees and nearly always being on time, Indigo has made the lives of many customers very convenient.
The large aircraft orders, phasing out of aircrafts older than six years and Indigo's highly connected flight network to which a new destination is not added unless it can be connected to at least two other destinations points out to a highly planned long …show more content…
In contrast, Spicejet has 58 planes but it flies to 46 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 (Ramki). It also has a fast turnaround time and takes only 31 minutes to unload, clean, restock the plane, and board another flight full of passengers. An airline is charged for the duration its aircraft stays at the airport. Having a single make of aircraft again helps in this regard as the time taken by the crew gets optimized. Also the Average Stage length (flying time per flight) of one and half hours, which means not having to stock and serve hot meals in most flights. This again contributes to the low turnaround time. They also have a fleet which runs approximately always on-time (90 per cent) (Ramki). This not only makes their customers come back for their next trip but also saves a lot on operational …show more content…
Due to this, Indigo economises on airport charges, by parking for a lesser time, as its planes stay in the air for a longer time. This also relives the customers of the hassle of shifting to different planes while taking a connecting flight. This results in “a high aircraft utilization rate of more than 11.5 hours per day per plane” (Airlines in India: How is Indigo Different from other airlines and how has it been able to churn profits., 2014). Its cost-consciousness is reflected in the fact that it will not go to a new destination until it can fly from there to at least four different cities and amortise costs (Phadnis, 2013). This requires deft planning. “It also helps to capture the local market better” (Phadnis, 2013). For instance, Indigo has connecting flights from Indore to Delhi, Pune, Mumbai and Kolkata and is planning on adding Bangalore and Chennai too. This strategy makes certain that they have loyal customers who will have the choice to travel to all these places by Indigo. It thus builds reliability, getting a larger market share from