Case Study: Here’s Why IndiGo Airlines Continues to be Successful

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Due to the high structural cost and bottlenecks in the infrastructure, the Indian aviation industry has stood like a plainwreck. However, there are a few airlines in the country that are making profits and this is due to the generous crude oil pricing. The Indian airlines have lost over $10 billion since the year 2009 and their debts are around $11.3 billion, claims Capa India, an aviation consultancy.

Despite this, IndiGo is the only Indian airline that has remained unaffected. IndiGo is the the inexpensive airline founded by InterGlobe Enterprises of Rahul Bhatia along with Rakesh Gangwal, the former US Airways CEO in 2006. The airline could prosper even in the troubled industry by reporting profits right from the third year of commencing its operations. In fact, the airline enjoys around 40 percent share of the aviation market in the country that is the largest for any airline.

Operational Environment 

The success of IndiGo is quite remarkable against its brutal operational environment that involves creaking airports, complex aviation regulations, rising airport, fierce competition, high cost of oil and exorbitant taxes. As per the airline’s president, Aditya Ghosh, they focus on getting their customers from one point to another safely with their bags and service them food that will not turn them sick.

Secret to IndiGo’s Success

IndiGo focuses on basic things such as flying on time, maintaining clean aircrafts and providing decent service when flyers are on board. Also, the airline flies the Airbus320s, a single type of plane that handles the operations simple and keeps the prices low. IndiGo has ordered aircrafts repeatedly and this has allowed it to negotiate on the price. It sells and leases the planes. It also cushions its balance sheet from any uncertainty of aviation and helps in retaining a young fleet. IndiGo is one among the biggest fleets in the country with 98 planes and counting. This way, the airline gets the benefit of frequent flying in comparison to the others.

IndiGo’s Strategy

IndiGo is able to make consistent profits as it follows the strategy implemented by Southwest Airlines of the U.S. It is the only global airline to make profits for over 40 years. IndiGo has modeled the strategy that Southwest has been following, and it is flying a specific type of plane.

Apart from IndiGo, the competitors of Southwest such as Ryanair and Spirit are also successful by adhering to the aggressive focusing on the ancillary revenues and low cost business model. The ancillary revenues include cancellation and baggage fees.

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