Indigo — Flying above the rest?
What started off in 1912 as a single route travel channel connecting two parts of erstwhile India (Karachi and Delhi) is now a booming industry, poised to become the largest industry of its kind in the world by 2030.
Till the 1990s, Air India ruled the roost and the skies. 1994 saw the industry open up and a plethora of private players began jostling for market share. The 1953 Air Corporation Act got replaced by the Air Corporations (Transfer of Undertaking and Repeal) Act, 1994, and the industry has been soaring up ever since… or has it?
A deeper inspection reveals that the last two and a half decades since India’s liberalisation, hordes of airline companies mushroomed, each fighting it out to gain market share. Some like Indigo took off beautifully while some like Kingfisher and Deccan Air nosedived. Each of these brands had a unique proposition. Some of the first low cost carriers to hit the market were SpiceJet and Indigo fared well by offering economical air travel opportunities to the otherwise ignored lower-middle and middle class demography.
Some of the low cost carriers created a niche during this time by disassociating with luxury air travel instead offering their passengers the ability to fly at much lower rates without added amenities. This change in mind-set brought in a divide of sorts between carriers that were still positioning air travel as a luxury activity replete with fancy food and entertainment facilities along with a strict class-wise segregation inside the airplane, vis-a-vis those brands that provided a no-benefits relationship to their flyers.
These new airline brands priced their flights extremely competitively — often way below the prices that Air India or Jet would ask for. Online portals that came up also facilitated easy comparison between these prices and allowed users to go through reviews and make informed choices, further helping the cause of low-budget airlines.
No wonder, that industry experts envisage low cost carriers to occupy as large as a 75–80% market share in the next two years. Notable among these, would be Indigo — one of the only airlines in India that is reporting profits as of 2017. Indigo’s share of traffic is poised to reach the 55–60% bracket within the next two years — a remarkable achievement in such a large and competitive market dominated by established brands. At the same time, airline companies that had the highest top of the mind recall just a few years ago like Air India and Jet are now floundering with critics foreseeing their market share drop to an abysmal 10% in the next two years from a whopping 90% combined market share that these two brands enjoyed back in early 2000s.
Indigo Airlines truly revolutionised the airlines industry. It took some great decisions that paved its way to market domination and helped it rise to the horizon of success. It is one of the fastest growing airlines in India, with over 110 aircrafts including domestic and international flights. Set up in 2006 by InterGlobe Enterprises. It is also one of the cheapest airlines in India, along with being one of the only profit making airlines in India as of 2017.
Slashing costs where customers wouldn’t feel it
When Indigo started operations, it formed a major cost-cutting partnership with Airbus — its supplier by buying 100 new A-320s. It was a volume of purchase that enabled a low-price on the buy and partnership-type commitment on maintenance. This was a major innovation during a time when other low-cost carriers were working with older, leased aircrafts and battling a reputation for inferior service. Their buying of Aircrafts helped avoid maintenance trouble and with planning, they could maintain their much-praised punctuality.
Indigo also has a single class system with only an Economy class, which helped save time, money and crew to be spent on privileged customers. The food loaded onto the plane were also not complete meals as was the case on other airlines, but beverages, sandwiches and other items which can save both time and money.
Indigo also makes use of technology to save fuel by optimising minimum fuel burning routes and flying altitudes. Unlike other airlines that use manual systems, Indigo has invested in a technology called ACARS which can measure on-time performance more effectively, thus providing precise numbers to improve upon.
Indigo has also cut down on marketing costs, they do not advertise as regularly as the other airlines do. However, they find their opportune moments such as the downfall of Kingfisher when they advertised heavily with catchy phrases and visuals, showing pride in their punctuality. Such cost cutting helped Indigo greatly in an effective manner.
Boeing has forecasted that Indian air traffic will grow at a rate of 15% a year over the next five years, and a requirement of 1000 aircrafts over the next 20 years, which leaves ample room for Indigo to improve-and maybe compete to be the fastest growing airline in the fastest growing aviation market.