IndiGo Airlines: A Comprehensive Analysis of Business Strategies

This report offers a comprehensive analysis of IndiGo Airlines, a prominent low-cost carrier in the Indian aviation market. It begins with an executive summary and an overview of the company, including its operational history and market position. The report delves into a situational analysis, examining both the external environment (political, economic, social, technological, legal, and environmental factors) and the internal environment of IndiGo. It assesses the airline's current performance, including financial metrics and market share, and analyzes the competitive landscape. The report explores IndiGo's current strategies, conducts a SWOT analysis, and identifies strategic objectives. Key value drivers, such as networks, pricing, products, customer service, and loyalty programs, are discussed, along with proposed action plans and a Gantt chart for implementation. The report concludes with future projections, findings, and recommendations, providing a well-rounded assessment of IndiGo's business capabilities and strategic direction. It also includes financial data and market share information in the appendices.

Running head: ANALYSIS INDIGO AIRLINES
ANALYSIS INDIGO AIRLINES
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Author's Note:

1ANALYSIS INDIGO AIRLINES
Executive summary
This report aims to discuss the business capabilities and strategies of one of the most popular
low-cost airlines of Indian market, IndiGo Airlines. This report has discussed the financial
operation of the company based on its annual report of the current year. The Indian aviation
market where this company operates is developing but has tough competition among the airline
companies of similar strength. The action plan has focused on the six value drivers which include
networks, price of the service, products and packages, customer service and relationships and
distribution with loyalties. Based on this, the Gantt has also been provided.

2ANALYSIS INDIGO AIRLINES
Table of Contents
Introduction:....................................................................................................................................4
Company overview..........................................................................................................................4
Situational Analysis.........................................................................................................................6
External environment Analysis:......................................................................................................6
Internal environment analysis........................................................................................................10
Current Performance..................................................................................................................10
Environment in which it competes............................................................................................11
Market activity...........................................................................................................................12
Competition analysis.................................................................................................................14
Current strategies of Indigo.......................................................................................................15
SWOT analysis:.............................................................................................................................18
Strategic objectives:.......................................................................................................................20
Identification of the Key value drivers..........................................................................................21
Action plans to achieve the value driver........................................................................................23
Value Driver 1: Network...........................................................................................................23
Value driver 2: Distribution.......................................................................................................24
Value driver 3: Price..................................................................................................................25
Value driver 4: Products and Packages.....................................................................................26
Value driver 5& 6: Customer service and relationships with Loyalty awards..........................27

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Future Projections..........................................................................................................................28
Findings:........................................................................................................................................29
Conclusion:....................................................................................................................................30
References and Bibliography:........................................................................................................31
Appendices:...................................................................................................................................35

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Introduction:
The aim of this report is to discuss the situation of the Aviation market of India especially
focusing on the company IndiGo Airlines which has been operating in this market for more than
ten years. The aviation industry of India is fast growing and gets the full support from the
government and other stakeholders for which it has become the first choice of the customers
(Jung, Kim & Yoo 2018, p. 110). This airline has been initially working in the domestic market
of India with high quality customer service and low fare. This report will discuss the current
performance of the company, its market activity and the internal as well as external environment
in which it operates. It will also analyze the situation and market condition of the Indian Aviation
market. Along with it, the report will discuss the strategic objectives taken by the company for
next three years with a detailed discussion of key value drivers like Networks, Price of the
service, Products and packages, Customer service and relationships, Customer loyalty and
Distribution. By focusing on these value drivers, the company will be advised with an effective
action plan which will help it to move in a higher position in the global aviation market. These
key value drivers will assist the firm in achieving the objectives and hence, action plans for each
of them with measures and targets with each one of them shall be provided. A Gantt chart
representing the timeline will also be provided.
Company overview
IndiGo entered the Indian market in 2006 and since then the company has been operating
in the domestic market in India. IndiGo is also the largest individual Asian low-cost carrier in the
terms of jet fleet size as well as the number passengers carried (Ibef.org. 2018). This particular
airline operates in 52 destinations from its primary hub situated in the Indira Gandhi
International Airport, New Delhi.

5ANALYSIS INDIGO AIRLINES
Figure 1: Company Facts
(Source: As created by the Author)
Figure 2: The Indigo Airlines Logo
(Source: Goindigo.in 2018).

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Situational Analysis
External environment Analysis:
Political factors:
India has a fast-growing aviation market which attracts the political attention and hence
they provide it with certain benefits. This stable political system of India allows 100% foreign
direct investment in the Greenfield airports and more than 74% in the existing airports which
enables the airlines to utilize the new routes as well as markets so that they can earn additional
revenue (Kuchhal, Verma& Mandawat 2016). This country has strong and well-organized
regulations under which the airlines must operate. IndiGo mainly operates in the domestic
market hence it has to conform to the 5/20 rule. This regulation mandates that the domestic
airlines must operate for at least 5 years and have 20 carries before they start to operate in the
international market. These lowers the new entrants in the aviation market of India
(Civilaviation.gov.in 2018).Moreover, as the competition has become fiercer, the government of
India has come up with the UDAAN scheme to provide hope to the existing as well as potential
players.
Economic factors:
Economic factors support the developing aviation market of India. This is due to the fact
that the country has been recording a consistent GDP growth and income of the middle class is
also increasing. This hike in average income has enhanced the frequency of tourism for various
regions of the country. Fluctuation in the aviation fuel prices has affected the costs as well as
profitability of the airlines both in positive and negative ways (Kumar, Dash& Sahu 2018, p.19)..

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Figure 3: The concern of rising fuel prices
(Source: Ibef.org. 2018)
Social factors:
The lifestyle of Indian people is changing gradually to high therefore their demand of
getting comfort and service is also increasing. This is affecting the cost structure of the airlines.
The passenger profile has also changed due to this reason as they are becoming more economical
minded therefore they make the choice for the economy class tickets (Behera 2016, p.58). In
addition to this, the number of foreign tourists is increasing sharply but domestic leisure travel
has also hiked. In India, travelling in air even within a country has become a status symbol for
which the middle-class people are also getting attracted to use the airlines (Jung, Kim & Yoo
2018, p. 112). Hence, the different airlines in the industry come up with various schemes and low
cost models to be the best option for the consumers.

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Figure 4: The rising occupancy of the airlines
(Source: Financialexpress.com 2018)
Technological factors:
As the government of India has been investing in the development of airlines and
modernizing the airports, it has become easy for the airline companies to operate successfully in
the market (Indiatimes.com. 2018). Despite the fact the video conferencing process have reduced
the number of commuters, the technological development and applications have increased
interest in adopting the satellite-based navigation system to pilot the flights which further
motivates the consumers to travel in the airline (Sanyal& Hisam 2016, p. 156).

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Figure 5: The application of Indigo airlines
(Source: Indiatimes.com. 2018)
Legal factors:
The regulations of the airlines industry in the Indian market are strict which has increased
the number of legal cases against the companies from both the customers as well as the worker’s
side. The workers are not being paid their salaries on time and the customers are complaining of
poor quality service which is increasing the legal costs of the companies (Prabhu 2016). This is
the reason why the companies are taking measures for adhering to all the regulation thus this
ends up increasing the legal costs for the organization. Moreover, all the airlines are required to
abide by the Aviation Law 2018 along with the guidelines stated by Aviation Security Rules and
Regulations.

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Environmental factors:
Adverse weather conditions result in the cancellation or delay of the flights that directly
affects the revenue of the airline companies. In order to reduce the carbon footprint, the Indian
airlines companies are participating in various CSR activities and adopting the fly green methods
(Saranga & Nagpal 2016). It is the duty of every airline as present in the industry to ensure that
they spend an adequate amount on Research and development to ensure success.
Internal environment analysis
Current Performance
IndiGo in this 2017 to 2018 annual year has earned 3.6 billion USD as revenue which has
increased by 13.7% in comparison with its revenue in 2017. It has gained 23.1% Increase in
passenger ticket revenue in FY18 Yield is 3.59 which is 2.6% more than the last financial year
(see appendix 1).Indigo’s total cash increased by 46.7% to Rs. 137,082.56 million as of March
31, 2018 (see figure 6). The company’s aircraft ownership cost comprises engine and aircraft
rentals that has increased by 7.7%, employee benefit expenses has increased by 19% and other
expenses by 27.4% from the last annual year (Goindigo.in 2018). It has a 42.1% domestic market
share as of 2018 June in comparison to 38.2% in September 2017 (see figure 8).

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0.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
Financial Report IndiGo 2018
(Figure 6. Financial Report IndiGo 2018)
(Source: author’s creation)
Therefore, as the company’s annual report 2018 has stated that the total cash increased by
46.7% and IndiGo has enabled to reduce its debt by 5.5% in this current year. The main
competitors of Indigo airlines are Air India, Jet Airways, Spice Jet and Go Air. All these
companies are fast improving in every aspect by utilizing the external environment present in the
aviation market of India.
Environment in which it competes
The aviation industry of India has registered traffic at a CAGR of 7.08 per cent in the
financial year of 2017. The Indian domestic carrier industry is one of the fastest growing aviation
industries around the globe and can be ranked as the third largest civil aviation market. The
number of air passengers have grown considerably from 14 million at the beginning of the
century to a current rate of 135 million in 2016. It has been estimated that the market shall