Interglobe Aviation Ltd. Competitive Positioning Analysis Report

This report presents a comprehensive competitive positioning analysis of Interglobe Aviation Ltd., commonly known as Indigo Airlines. It begins with an overview of the airline, highlighting its market share, fleet size, and operational scope within the Indian aviation industry. The report then delves into an industry analysis, examining factors such as market growth, demographic trends, regulatory aspects, technological advancements, and consumer preferences. A Porter's Five Forces analysis is used to assess the competitive dynamics within the industry, including the threat of new entrants, bargaining power of suppliers and buyers, the threat of substitutes, and rivalry among existing firms. The report also includes a SWOT analysis, identifying Indigo's strengths, weaknesses, opportunities, and threats, and concludes with a strategic overview, offering insights into Indigo's market positioning and competitive advantages.

From: suraj jaju
Subject: Interglobe aviation ltd. competitive positioning analysis
ABOUT INTERGLOBE AVIATION LTD.
IndiGo is an Indian low-cost airline headquartered in Gurugram, Haryana, India. It is the large
India by passengers carried and fleet size, with a 47.9% domestic market share as of march 2020.
the largest individual Asian low-cost carrier in terms of jet fleet size and passengers carried, and th
largest carrier in Asia with over 64 million passengers carried in financial year 2018–19. The airline operates
1500 flights everyday to 87 destinations– 63 domestic and 24 international. It has its primary hub at Indira
Gandhi International Airport, Delhi.
The airline was founded as a private company by Rahul Bhatia of InterGlobe Enterprises and
Gangwal, a United States-based expatriate Indian in 2006. It took delivery of its first aircraft in July
commenced operations a month later. The airline became the largest Indian carrier by passenger m
share in 2012. The company went public in November 2015.
INDUSTRY ANALYSIS
India has 464 airports and airstrips, of which 125 airports are owned by Airport Authority of Ind
(AAI). These 125 AAI airports manage close to 78% of domestic passenger traffic and 22% of
international passenger traffic.
Passenger traffic in India stood at 316.51 mn during April 2018– Feb 2019. Out of which domestic
passenger traffic stood at 252.92 mn while international traffic stood at 63.59 mn. The aircraft
movement, passenger traffic and freight traffic increased by 4.9%, 4.5% and 3.1% respectively
February 2019 viz-a-viz February 2018, across all Indian airports taken together.
However, the share of international cargo traffic is much higher at 68.5% in comparison with 3
domestic cargo traffic.
Maintenance, Repair & Overhaul (MRO) industry is expected to grow to $1.2 bn by 2020 from
$950 mn currently.
In evaluating the industry, the environmental factors that are most important are annu
demographic trends, regulatory factors, technology developments, supplier channels, as
consumer habits and social considerations (Exhibit 1).the effect of these factors is that indigo
have the highest market share in the industry.it is able to keep its cost low and delivering on t
Customers are satisfied with the quality and performance of the airplanes. These factors are in
of them and hence annual growth is higher than market growth. Instead of owning the airplane
airline leases them which is again cost effective. Although it is very difficult to create moat and
customers to pay premium in this industry, it can be seen that indigo is somehow trying to cre
and customers are paying the premium. Therefore, one can say that it is well positioned to ca
on these attractive industry fundamentals.
A Porter’s Five Forces analysis (Exhibit 2) further solidified this reasoning.The economies of scale is
fairly difficult to achieve in the industry in which Indigo Airlines operates. This makes it eas
those producing large capacitates to have a cost advantage. It also makes production cost
new entrants. This makes the threats of new entrants a weaker force.The number of suppliers in
the industry in which Indigo Airlines operates is a lot compared to the buyers. This means that
suppliers have less control over prices and this makes the bargaining power of suppliers a wea
The number of suppliers in the industry in which Indigo Airlines operates is a lot more than the
number of firms producing the products. This means that the buyers have a few firms to choos

and therefore, do not have much control over prices. This makes the bargaining power of buye
weaker force within the industry. There are very few substitutes available for the products that
produced in the industry in which Indigo Airlines operates. The very few substitutes that are av
are also produced by low profit earning industries. This means that there is no ceiling on the
maximum profit that firms can earn in the industry in which Indigo Airlines operates. All of thes
factors make the threat of substitute products a weaker force within the industry. The number
competitors in the industry in which Indigo Airlines operates are very few. Most of these are als
large in size. This means that firms in the industry will not make moves without being unnotice
makes the rivalry among existing firms a weaker force within the industry.
Strategic Groups & Positioning
There are few airlines in the Indian market but pricing plays a crucial role in this industry. Cust
prefer the cheapest air ticket despite of the brand. Therefore, it is difficult to create brand loya
Also other mode of transports like trains, cars, vessels are very attractive for cheap travel. Also
introduction of bullet train in future can create a big challenge. Exhibit 3 shows a breakdown
main competitors.
Competitor analysis
The aviation industry in India is in its initial stage dominated by few low-cost airlines. Indigo en
huge competitive advantage. It owns 47.9% of domestic market share. The industry had seen
bankruptcy of big domestic airlines like kingfisher, deccan airlines, and recently jet airways. W
other players are suffering in the market indigo is expanding. They have increased their fleets
including 100 new generation A320 NEOs, 123 A320 CEOs, 25 ATRs and 13 A321 NEO. they ar
profitable for last 10 years, an achievement that no other airline was able to do. Its market
capitalisation stands at 32975.12 Rs. Crores Followed by SpiceJet with 2025.26 Rs. Crores.
SWOT ANALYSIS
STRENGTHS 1.IndiGo has high brand awareness and brand equity
2.Cost leadership: Successful implementation of low-cost
strategy.
3.Highly efficient management that ensures high rate of on- tim
arrivals.
4.Continuous innovation to improve on non-price factors.
5.Tie-up with hotels.
6.Ease of ticket booking for customers.
WEAKNESS 1.Scope of product differentiation is less.
2.Benefits of the innovations implemented by IndiGo to provide
better services to the customers are short-lived, as these can b
easily imitated by the competitors.
3.IndiGo is not exploring the untapped domestic air cargo mar

OPPORTUNITY 1. Opening up of International routes can boost business of
Indigo
2. Largest market share among LCCs in Indian Market
3. Middle class taking to the skies can be a huge opportunit
for Indigo airlines
Growing demand for foreign travel:
THREATS 1.Plenty of new LCCs to compete with for Indigo airlines
2. Rising Labour costs and changing govt policies
3. Rising Fuel Costs can affect business margins for Indigo
Addendum
Exhibit 1
Environmental analysis
BASIS MARKET INDIGO AIRLINES
Annual growth 18.6% 20.86%
Demographic Trends  Rising working group and
widening middle class
demography is expected to boost
demand
 India plans to increase the
number of airports to 250 by
2030 to cater to growing leisure
and business travel
 Country will become the third
largest aviation market in terms
of passengers by 2026.
 Freight traffic also likely to go
up as trade with the rest of the
world increases
 Increasing economy and ease of
doing business is allowing more
businesses to grow.
Increase in travel and tourism industry.
 Falling crude oil means cheap fuel
for the airline and benefits is passed to
the customers.

Regulatory factors Regulatory exists:The Directorate
General of Civil Aviation (DGCA) is
the statutory body formed under
the Aircraft (Amendment) Bill,
2020.
DGCA regulates all the airlines which
will now be replaced byCivil Aviation
Authority (CAA).
Technology developmentsbiometric-based recognition has
been implemented at the
entrance to airline lounges, and
integration of the technology into
signage and flight information
display systems (FIDS) has been
touted as a means to serve
passengers with personalised
information and offers.
ARTIFICAL INTELLIGENCE-
AI holds potential in a number of
other areas, such as real-time
predictive pricing, predictive
aircraft maintenance and
operational efficiency on the
airfield, further highlighting its
broad appeal to airlines.
ROBOTICS-
robots will be able to perform a
variety of tasks, ranging from
transporting luggage to
proactively identifying potential
security risks
Augmented reality (AR), virtual
reality (VR) and mixed reality
(MR) use cases ranging
from immersive IFE to airport
wayfinding and remote airport
operational control centres.
• Planes equipped with the ACARS (only
airline in India), that enables exact and
real time monitoring by the IndiGo
Operations Control Centre.
•
• First airline to use qbuster scanners for
passengers traveling without check-in
luggage
Consumer Preferences
/ Social Factor
 Difficulty to create brand
loyalty.
 Moat is not there in the
market.
 People will buy the cheapest
flight ticket.
 Indigo owns 47.5% market.
 On time 89% of time.
 Airplanes are leased not owned.
Cheap airfare most of the time.

Exhibit 2:
Porter's Five Forces Analysis:
1. Threat of New Entrants
• The economies of scale is fairly difficult to achieve in the industry in which Indigo Air
operates. This makes it easier for those producing large capacitates to have a cost
advantage. It also makes production costlier for new entrants. This makes the threat
new entrants a weaker force.
• The product differentiation is strong within the industry, where firms in the industry
differentiated products rather a standardised product. Customers also look for
differentiated products. There is a strong emphasis on advertising and customer ser
as well. All of these factors make the threat of new entrants a weak force within this
industry.
• The capital requirements within the industry are high, therefore, making it difficult fo
new entrants to set up businesses as high expenditures need to be incurred. Capital
expenditure is also high because of high Research and Development costs. All of the
factors make the threat of new entrants a weaker force within this industry.
• The access to distribution networks is easy for new entrants, which can easily set up
distribution channels and come into the business. With only a few retail outlets sellin
product type, it is easy for any new entrant to get its product on the shelves. All of t
factors make the threat of new entrants a strong force within this industry.
• The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it difficul
new entrants to join the industry, therefore, making the threat of new entrants a we
force.
How Indigo Airlines can tackle the Threat of New Entrants?
• Indigo Airlines can take advantage of the economies of scale it has within the indust
fighting off new entrants through its cost advantage.
• Indigo Airlines can focus on innovation to differentiate its products from that of new
entrants. It can spend on marketing to build strong brand identification. This will hel
retain its customers rather than losing them to new entrants.
2. Bargaining Power of Suppliers
• The number of suppliers in the industry in which Indigo Airlines operates is a lot compar
the buyers. This means that the suppliers have less control over prices and this makes t
bargaining power of suppliers a weak force.
• The product that these suppliers provide are fairly standardised, less differentiated and
low switching costs. This makes it easier for buyers like Indigo Airlines to switch supplier
makes the bargaining power of suppliers a weaker force.
• The suppliers do not contend with other products within this industry. This means that th
are no other substitutes for the product other than the ones that the suppliers provide. T
makes the bargaining power of suppliers a stronger force within the industry.

• The suppliers do not provide a credible threat for forward integration into the industry in
which Indigo Airlines operates. This makes the bargaining power of suppliers a weaker fo
within the industry.
• The industry in which Indigo Airlines operates is an important customer for its suppliers.
means that the industry’s profits are closely tied to that of the suppliers. These suppliers,
therefore, have to provide reasonable pricing. This makes the bargaining power of suppl
weaker force within the industry.
How Indigo Airlines can tackle the Bargaining Power of Suppliers?
• Indigo Airlines can purchase raw materials from its suppliers at a low cost. If the costs or
products are not suitable for Indigo Airlines, it can then switch its suppliers because swit
costs are low.
• It can have multiple suppliers within its supply chain. For example, Indigo Airlines can ha
different suppliers for its different geographic locations. This way it can ensure efficiency
within its supply chain.
• As the industry is an important customer for its suppliers, Indigo Airlines can benefit from
developing close relationships with its suppliers where both of them benefit.
3. Bargaining Power of Buyers
• The number of suppliers in the industry in which Indigo Airlines operates is a lot more th
the number of firms producing the products. This means that the buyers have a few firm
choose from, and therefore, do not have much control over prices. This makes the barga
power of buyers a weaker force within the industry.
• The product differentiation within the industry is high, which means that the buyers are
able to find alternative firms producing a particular product. This difficulty in switching m
the bargaining power of buyers a weaker force within the industry.
• The income of the buyers within the industry is low. This means that there is pressure to
purchase at low prices, making the buyers more price sensitive. This makes the buying p
of buyers a weaker force within the industry.
• The quality of the products is important to the buyers, and these buyers make frequent
purchases. This means that the buyers in the industry are less price sensitive. This make
bargaining power of buyers a weaker force within the industry.
• There is no significant threat to the buyers to integrate backwards. This makes the barg
threat of buyers a weaker force within the industry.
How Indigo Airlines can tackle the Bargaining Power of Buyers?
• Indigo Airlines can focus on innovation and differentiation to attract more buyers. Produc
differentiation and quality of products are important to buyers within the industry, and In
Airlines can attract a large number of customers by focusing on these.
• Indigo Airlines needs to build a large customer base, as the bargaining power of buyers
weak. It can do this through marketing efforts aimed at building brand loyalty.
• Indigo Airlines can take advantage of its economies of scale to develop a cost advantage
sell at low prices to the low-income buyers of the industry. This way it will be able to attr
large number of buyers.

4. Threat of Substitute Products or Services
• There are very few substitutes available for the products that are produced in the indust
which Indigo Airlines operates. The very few substitutes that are available are also produ
by low profit earning industries. This means that there is no ceiling on the maximum pro
that firms can earn in the industry in which Indigo Airlines operates. All of these factors m
the threat of substitute products a weaker force within the industry.
• The very few substitutes available are of high quality but are way more expensive.
Comparatively, firms producing within the industry in which Indigo Airlines operates sell
lower price than substitutes, with adequate quality. This means that buyers are less like
switch to substitute products. This means that the threat of substitute products is weak
within the industry.
How Indigo Airlines can tackle the Threat of Substitute Products?
• Indigo Airlines can focus on providing greater quality in its products. As a result, buyers
choose its products, which provide greater quality at a lower price as compared to subst
products that provide greater quality but at a higher price.
• Indigo Airlines can focus on differentiating its products. This will ensure that buyers see
products as unique and do not shift easily to substitute products that do not provide the
unique benefits. It can provide such unique benefits to its customers by better understan
their needs through market research, and providing what the customer wants.
5. Rivalry Among Existing Firms
• The number of competitors in the industry in which Indigo Airlines operates are very few
Most of these are also large in size. This means that firms in the industry will not make m
without being unnoticed. This makes the rivalry among existing firms a weaker force wit
the industry.
• The very few competitors have a large market share. This means that these will engage
competitive actions to gain position and become market leaders. This makes the rivalry
among existing firms a stronger force within the industry.
• The industry in which Indigo Airlines is growing every year and is expected to continue t
this for a few years ahead. A positive Industry growth means that competitors are less li
to engage in completive actions because they do not need to capture market share from
other. This makes the rivalry among existing firms a weaker force within the industry.
• The fixed costs are high within the industry in which Indigo Airlines operates. This makes
companies within the industry to push to full capacity. This also means these companies
reduce their prices when demand slackens. This makes the rivalry among existing firms
stronger force within the industry.
• The products produced within the industry in which Indigo Airlines operates are highly
differentiated. As a result, it is difficult for competing firms to win the customers of each
other because of each of their products in unique. This makes the rivalry among existing
a weaker force within the industry.
• The production of products within the industry requires an increase in capacity by large
increments. This makes the industry prone to disruptions in the supply-demand balance
often leading to overproduction. Overproduction means that companies have to cut dow
prices to ensure that its products sell. This makes the rivalry among existing firms a stro
force within the industry.

• The exit barriers within the industry are particularly high due to high investment require
capital and assets to operate. The exit barriers are also high due to government regulati
and restrictions. This makes firms within the industry reluctant to leave the business, an
these continue to produce even at low profits. This makes the rivalry among existing firm
stronger force within the industry.
• The strategies of the firms within the industry are diverse, which means they are unique
each other in terms of strategy. This results in them running head-on into each other
regarding strategy. This makes the rivalry among existing firms a strong force within the
industry.
How Indigo Airlines can tackle the Rivalry Among Existing Firms?
• Indigo Airlines needs to focus on differentiating its products so that the actions of
competitors will have less effect on its customers that seek its unique products.
• As the industry is growing, Indigo Airlines can focus on new customers rather than winni
the ones from existing companies.
• Indigo Airlines can conduct market research to understand the supply-demand situation
within the industry and prevent overproduction.

Exhibit 3: comparison with other players in the industry
Competitor analysis
Basis
Competitor
analysis
SPICE JET AIR INDIA GO AIR VISTARA
Geographic
Presence
As of May 2019,
Indian
airline SpiceJet flies
to a total of 64
destinations,
including 52 domestic
destinations and 12
international
destinations within
Asia.[1][2]
The airline
operates to 103
destinations
with
international
flights to 45
cities in 31
countries and
domestic flights
to 58 cities.[3]
As of March
2020, the airline
operates over
330 daily flights
to 36
destinations,
including 27
domestic and 9
international
destinations
The airline serves
34[5] destinations
SEGMENT Cost Conscious
Passengers
Indian
international
travellers
Cost Conscious
Passengers
People looking for
flights to travel
Target groupLower Middle Class
/ Middle Class
Corporate,
Upper Middle
Class
Lower Middle
Class / Middle
Class
Corporate/Executive/
Families (Upper Class
and Middle Class)
POSITIONINGSpiceJet offers low
cost tickets with no
frills
Air India offers
premium
airline travel
from India to
other global
destinations
Low Cost No
Frills
Vistara offers great
In-flight Experience
with affordable prices
and reliability of the
brand of Tata

Strategy map

REFERENCES
• https://en.wikipedia.org/wiki/IndiGo
• https://www.investindia.gov.in/sector/aviation
• https://www.marketing91.com/swot-analysis-of-indigo/
• https://www.goindigo.in/about-us.html
• https://www.ibef.org/download/Aviation-Report-Jan-2018.pdf
• https://www.ibef.org/industry/indian-aviation.aspx
• https://www.statista.com/statistics/575207/air-carrier-india-domestic-market-share/
• https://www.screener.in/company/INDIGO/