STRATEGIC

MANAGEMENT

INDUSTRY- AVIATION
COMPANY- INDIGO
BY
LT-B08
PRAGATI SINGH-JL18PG097
PIYUSH RAJ-JL18PG094
MONIKA KUMARI-JL18PG085
MONIKA TOLANI-JL18PG127
SAMAKSH SAXENA-JL18PG118
SATWIK GINODIA-JL18PG127
 GLOBAL INDUSTRY OVERVIEW
Airline industry encourages/worldwide exchange, the travel industry and financial
development. Subsequently, it is vital to the/appearance/of/globalization/occurring/in
numerous different enterprises.

“Over the most recent couple of decades, worldwide airlines have forcefully extended their
span to new markets comprehensively, through foundation of unions and organizations. The
vast majority of the real airlines presently direction worldwide nearness.”

Be that as it may, airline industry is a standout amongst the most recurrent just as
unpredictable businesses that is amazingly helpless to political, monetary and social
elements.

Additionally, airline industry is portrayed with incredibly low overall revenue. Other than
interior cost factors, airlines' benefit is additionally very associated to monetary development;
as it legitimately influences interest for air travel and exchange. In this manner, airlines need
to always develop and improve to endure and stay gainful in the midst of such outside
vacillations.

The worldwide airline industry was unfavorably influenced amid the 2008/2009 retreat. Be
that as it may, alongside the improvement in worldwide economy, the airline industry has
likewise indicated solid execution as of late, including improved gainfulness.

The airline industry exists in a seriously aggressive market. Lately, there has been an
industry-wide squeeze, which will have extensive consequences for the industry's pattern
towards growing local and universal administrations. Previously, the airline industry was at
any rate halfway government possessed.

Airplane terminal limit, course structures, innovation and expenses to rent

or purchase the physical air ship are noteworthy in the airline industry.
Other substantial issues are:

 Weather - Weather is variable and eccentric. Outrageous warmth, cold, haze and
snow can close down airplane terminals and drop flights, which cost airline cash.

 Fuel Cost – “According to the Air Transportation Association (ATA), fuel is an

airline's second biggest cost. Fuel makes up a huge part of an airline's complete
expenses, in spite of the fact that productivity among various transporters can differ
broadly. Short pull airlines regularly get lower eco-friendliness since departures and
arrivals devour high measures of fly fuel.”
  Labor - According to the ATA, work is the airline's No.1 cost; airlines must pay
pilots, airline stewards, things handlers, dispatchers, client administration and others.

INDIAN AVIATION INDUSTRY

The civil aviation industry in India has developed as one of the quickest developing ventures
in the nation amid the most recent three years. India is as of now considered the third biggest
local civil aviation advertise on the planet. India has turned into the third biggest residential
aviation advertise on the planet and is relied upon to surpass UK to turn into the third biggest
air traveler showcase by 2024.

Market size
 India’s passenger* traffic grew at 16.52 per cent year on year to reach 308.75 million
in FY18. It grew at a CAGR of 12.72 per cent during FY06-FY18.
 Domestic passenger traffic grew YoY by 18.28 per cent to reach 243 million in FY18
and is expected to become 293.28 million in FY20E. International passenger grew
YoY by 10.43 per cent to reach 65.48 million in FY18 and traffic is expected to
become 76 million in FY20E.
 In FY18, domestic freight traffic stood at 1,213.06 million tones, while international
freight traffic was at 2,143.97 million tones.
 Amid Apr-Nov 2018, residential airplane development remained at 1.43 million while
global flying machine development remained at 0.30 million. As of December 2018,
India has 102 operational airplane terminals. As of May 2018, there is about 588
business airplane in activity in India.

Investment
 According to data released by the Department of Industrial Policy and Promotion
(DIPP), FDI inflows in India’s air transport sector (including air freight) reached US$
1,658.23 million between April 2000 and June 2018. The government has 100 per
cent FDI under automatic route in scheduled air transport service, regional air
transport service and domestic scheduled passenger airline. However, FDI over 49 per
cent would require government approval.
 India's aviation industry is relied upon to observe Rs 35,000 crore (US$ 4.99 billion)
interest in the following four years. The Indian government wants to contribute US$
1.83 billion for advancement of air terminal foundation alongside aviation route
benefits by 2026.
 India's aviation industry is to a great extent undiscovered with immense development
openings, taking into account that air transport is as yet costly for lion's share of the
nation's populace, of which almost 40 percent is the upwardly portable white collar
class.

 The industry partners ought to connect with and work together with strategy creators
to execute proficient and level headed choices that would support India's civil aviation
industry. With the correct strategies and persevering spotlight on quality, cost and
traveler premium, India would be very much set to accomplish its vision of turning
into the third-biggest aviation showcase by 2025.
 ABOUT THE COMPANY
“Indigo was established in 2006 as a privately owned business by Rahul Bhatia of InterGlobe
Enterprises and Rakesh Gangwal, a United States-based NRI. InterGlobe had a 51.12% stake
in IndiGo and 47.88% was held by Gangwal's Virginia based organization Caelum
Investments. IndiGo put in a firm request for 100 Airbus A320-200 airplanes in June 2005
with designs to start tasks in mid-2006. IndiGo took conveyance of its first Airbus air ship on
28 July 2006, about one year in the wake/of/submitting/the/request. It started tasks on 4
August 2006 with/an/administration/from/New/Delhi/to/Imphal/through Guwahati. Before
the finish of 2006 the carrier had six airplanes and nine more air ship was obtained in 2007.”

“In December 2010, IndiGo supplanted state-run bearer Air India as the third biggest carrier
in India, behind Kingfisher Airlines and Jet Airways with a traveler piece of the overall
industry of 17.3%.In 2011, IndiGo put in a request for 180 Airbus A320 air ship in an
arrangement worth US$15 billion. In January 2011, subsequent to finishing five years of
tasks, the aircraft got consent to dispatch worldwide flights. The carrier propelled worldwide
administrations in September 2011. In December 2011, the DGCA expressed reservations
that the fast development could affect traveller safety. In February 2012, Indigo took
conveyance of its 50th flying machine, under six years after it started activities in 2006.”

“For the quarter finishing March 2012, IndiGo was the most beneficial aircraft in India and
turned into the second biggest carrier in India as far as traveler piece of the overall industry.
On 17 August 2012, IndiGo/turned/into/the/biggest/aircraft/in/India/as/far as piece of the
overall industry outperforming Jet Airways, six years subsequent to beginning operations. In
January 2013, IndiGo was the second quickest developing minimal effort transporter in Asia
behind Indonesian carrier Lion Air. In February 2013, after the declaration of civil aviation
service that it would be enable IndiGo to take conveyance of just five air ship that year, the
aircraft wanted to present ease local flights by setting up a backup. Afterward, IndiGo
declared that it intends to look for authorization from the service to gain four more air ship,
subsequently taking conveyance of nine airplanes in 2013.”

“As of March 2014, IndiGo is the second biggest ease transporter in Asia as far as seats
flown. In August 2015, IndiGo put in a request of 250 Airbus A320neoaircraft worth $27
billion, making it the biggest single request ever in Airbus history.”

IndiGo reported a ₹3,200 crore (US$480 million) first sale of stock on 19 October 2015
which opened on 27 October 2015. As of October 2016, it is the biggest carrier in India as far
as travelers conveyed with a 42.6% piece of the pie.

Minimal effort transporter IndiGo's piece of the overall industry rose to its most elevated ever
in September on limit expansion. Piece of the overall industry of the nation's biggest carrier,
worked by InterGlobe Aviation Ltd., rose to 43.2 percent a month ago from 41.9 percent in
August, as indicated by information discharged by the Directorate General of Civil Aviation.
Happy season request, higher limit expansion and lower passages helped the carrier traveler
traffic in India, the world's quickest developing aviation showcase. The quantity of travelers
rose 19 percent on a yearly premise to almost 1.14 crore in September, the DGCA
information appeared.
 MISSION:

“Our passionate and creative team will innovatively provide small project facilitation,
business writing and grant writing to clients expecting high quality results, reliability and
excellent customer service.”

VISION:

“Our vision is to be a successful, world-standard company, working closely with business

and organisations to improve their results. We will achieve this by understanding client’s
needs and providing quality products and services that exceed their expectations. A strong
community commitment is incorporated into our work whenever possible. We look forward
to the journey with passion.”

VALUES:

 “A commitment to high quality customer service.

 Clear and open communication to ensure the best results.
 Reliability and integrity as a strong foundation for building trust.
 Efficient service and quality products.
 Innovative thinking.
 A sustainable environment to be enjoyed by future generations.
 The importance of enjoying life and work.”
 PRODUCT PORTFOLIO OF INDIGO AIRLINES
The product portfolio caters the sum of products or services presented by an organization.
The product portfolio analysis enables various views on type of stock, prospects on company
growth, margins of profit, contribution to income, income leadership and operational risk
efficiency.

Indigo airlines has segmented his market into cost conscious passenger services. They have
further targeted the different sections or the class or the society i.e. the middle class and lower
middle class customers. Indigo has positioned itself as low cost no frills airlines in India’s
sub-continent.

There are two types of products offered by Indigo airlines which are:
 In flight services
 On ground services

Few are the “Core Products” offered by Indigo airlines

Indigo provides low cost passenger air transportation for different class of the society i.e.
middle and lower middle class consumers as it can cater their experience towards flight
journey.

Few are the “Supplementary Products” offered by Indigo Airlines

Indigo offers both the products i.e. core products and supplementary products. It is like check
in. On-board food, flight connectors while travelling where the services provided by Indigo is
not available. It also provides the customers complementary gifts while there travelling
experience. Also, Indigo enables package of entertainment to its passengers such as music,
games, movies, and frequent programs of fliers.

Few are the “Augmented Products” offered by Indigo Airlines

Such products are those that had both the primary physical attributes as well as primary non-
physical attributes and further which are added to increase the value of the commodity.
Following are the augmented products catered by Indigo Airlines –

 Online booking of various services

 Various variety of meal options.
 Pick-up and drop services for the customers
 Ticketing through mobile
For instance, Indigo Airlines is one of the prominent player of the airlines industry. It
provides low cost transportation via air service to its customers. This showcases as their core
product in marketing mix. Also, there are varied supplementary services provided by them
like check in through web, on-board food as discussed above etc. they also cater variety of
meal options for their customers. As well for the convenience of customers and comfort of
customers, indigo airlines provides accessibility through online booking, ticketing through
mobile and various other comfort seeking services.

Indigo’s Cargo services named CarGO is also growing rapidly through it demand among
customers. Indigo takes good care of its customers. It enables special packaging facility for
fragile packages which comes under Indigo’ 6E priority. Indigo has a policy that they do not
accept shipments of perishable items like seafood, dairy, plants, meat. Some ordinary service
offered by Indigo airlines is that they carry postal mails via flights like speed posts, ordinary
mail and Army mail.

Profit margin drivers catered by Indigo airlines

 Route planning - Indigo operates over a lesser range of destinations than its
competitors however with the next frequency - with a fleet of seventy eight
planes for thirty six destinations whereas Spice Jet flies to forty six destinations
with fifty eight planes. Not scrutiny Jet's fleet size because it operates quite
double flights per day compared to Indigo. The network maps show that each one
Indigo's destinations area unit connected to a minimum of 2 cities whereas most
area unit connected to three or additional destinations, whereas this can be not the
case with Jet Airways. this suggests Indigo will keep its craft within the air for a
extended amount of your time and lay aside on airdrome charges. owing to this
Indigo incorporates a high craft utilization rate of quite eleven.5 hours per day per
plane. This additionally means customers do not have to appear for connecting
flights with alternative competitive operators.

 Maintenance contracts tightly framed - Indigo incorporates a Power by

the Hour contract with International Aero Engines (IAE), that provides the
engines, that place the load of performance delivery on the manufacturer. IndiGo
has similar agreements with airliner, yet like the vendors for alternative crucial
parts. These contracts in all probability return at a premium however it means
Indigo doesn't have to be compelled to pull out planes from service for repairs
and additionally doesn't have to be compelled to maintain an outsized inventory
of spares.
 Measures of cost cutting -

 Turnaround time - associate airline is charged for the period its craft stays at
the airdrome. Indigo incorporates a quicker work time (time taken between
landing and therefore the next take-off) of half-hour. purpose five is one among
the explanations for this. Having one build of craft once more helps during this
believe the time taken by the crew gets optimized.

Employee craft magnitude relation - Lower worker craft magnitude
relation of 102 compared to Jet Airways's a hundred thirty and Air India's 262.
Stage Length - Average Stage length (flying time per flight) of one.5 hours,
which implies not having to stock and serve hot meals in most flights. This once
more contributes to the low work time.

Most Indian airlines take delivery of craft by causing their own pilots and
engineers (to metropolis within the case of Airbus). Indigo prefers to induce them
delivered to Delhi, this can be costlier however it additionally results in higher
utilization of the on the market pilots and therefore the engineering crew.
 MICRO AND MACRO ENVIRONMENT ANALYSIS

“The micro/environment/refers/to/all/the factors that affect firms within a specific industry.

The Microenvironment is made/up of factors/which/have/a direct impact on the airline’s
ability to achieve its goals. This/involves/the customer, supplier, competitors, new
entrants, and substitutes/that/affect the operations of the organization.”

Indigo works in the highly volatile aviation industry, which demands high levels of efficiency
and high degrees of customer satisfaction to overcome challenges at micro economic level.

The airline industry is typical in the sense that, to a greater extent than most other industries,
it is impacted by several factors at the macro environmental level. Analysis of the
organization’s macro environment reveals its opportunities and threats.
The macro-environment provides the overall depiction of the appeal and attractiveness
of the airline industry. Various frameworks have been developed to analyses macro
environmental
factors that impact on airline performances of Indigo, vis-a-vis airline industry.

PESTLE ANALYSIS:

POLITICAL FACTORS:

Governance System:

The present governance status in the industry is facing challenges and Indigo has to keep a
close eye on the change in policies. The current trends in market, wherein the rival airline Jet
is already facing on the verge of bankruptcy due to debt. Hence, the government is very
particular towards providing any unnecessary debt to any airline companies, amidst all this
crisis.

Political stability in the existing markets:

Indigo aviation functions in many nations, so it has to adapt and adopt policies differently in
each nation based on strategy & execution to industry specific requirement. Given the recent
rise to population around the world, Indigo can experience greater instability in its existing
markets.

Taxation policies

Over the last two decade, Indigo airlines has benefitted from lower taxation policies
throughout. This has resulted in higher profits and increased spending in research and
development activities.

Changing policies with the new members:

There can be a transition of government in the near future. Indigo aviation has to prepare for
this as it may lead to change of priorities within the sector.
ECONOMIC FACTORS:

Economic factors includes – taxation rate, exchange rate, the stage of economy of country,
labor market conditions , inflation rate, interest rate, consumer disposable income, economic
performance of country etc.

Exchange rate:

The volatile exchange rate can lead to change in investment plans in the long term as well as
short term

Inflation Rate:

The rising inflation rate in the current trends in 2018 is bound to affect the Indigo aviation
industries and its consumers.

Taxation Rate:

Taxation policies change for corporates frequently with budgets. The company should take
care of change in such taxation rates and make necessary policy adjustments.

SOCIAL FACTORS:

social factors can not only help companies like "Indigo Aviation" to better understand the
way of doing business but also in understanding the customer preferences in the market it
operates in.

Media & Advertising:

Any kind of media can play a critical role in framing public opinion about the company.
Indigo can leverage and establish an efficient marketing network.

Societal norms & Hierarchy:

The consumers at each level behave differently as per their own societal norms. It should
strive to build a local team that understands the societal norms & attitudes to serve the
customers better.

Gender roles:

The gender roles are evolving in the country. Indigo can test can test various concepts to cater
and support the evolving gender roles in the local market.
TECHNOLOGICAL FACTORS:

Development & dissemination of mobile technology has transformed the customer

expectations. It has not to only manage the expectations, but has to innovate and stay ahead
of the competition.

Maturity of technology:

The technology in the sector is still nascent stage and most of the competitors are still vying
for new innovations that can help them garner a better market share.

Investment in R&D:

Investment into research and development is increasing and can lead to an industry wide
disruption through innovation of new products and services.

Intellectual property rights and patents production:

If Indigo invests more into safeguarding intellectual property rights, the industry would invest
more into research & development.

Technology transfer & issues for Indigo aviation:

In this sphere, there is no strong culture of technology transfer and companies are generally
reluctant to transfer or license technology for the fear of creating competitors out of
collaborations.

ENVIRONMENTAL FCTORS:

Environmental norms are also altering the priorities of product innovation. In many cases the
products are designed based upon environmental standards and expectations rather than
catering to traditional value propositions.

Consumers have become more and more aware these days towards product. They not only
just expect the players in aviation industry to adhere to legal standards but also exceed them
to become to responsible stakeholders of the community.

Waste management, especially close to urban cities has become an important phenomenon.
Government are coming up fast for strict norms.

Treaties like Paris Climate Agreement have put increased pressure on government and hence
consecutively on the industry as a whole.
LEGAL FACTORS:

Legal Proceedings:

The international norms for flights across the industry and needs to be followed. Also the
cases might take several years for resolution so Indigo aviation shall take care before entering
any international arrangements.

Indigo Aviation needs also to take care of employment laws inn the country and strictly
adhere to them.

Data protection laws in the nation needs to be looked if it has a robust legal & technological
mechanism to protect against data breaches or not.

Business laws procedure that government follows. These norms are consistent with
international institutions such as World Trading Organization, European Union etc.

5 FORCES MODEL:

Porter's five/forces include three forces from 'horizontal' competition--the threat of

substitute/products/or services, the/threat/of/established/rivals,/and/the/threat/of/new/entrants-
-and/two others/from 'vertical' competition—the/bargaining/power/of/suppliers/and/the
bargaining/power/of/customers

“Here we focus on the profitability of the Indian aviation industry and explains how Indigo
Airlines, a new entrant in the Indian aviation space, registered profits within three years of its
inception while its competitors continued to struggle with losses.
This analysis demonstrates how a firm incorporating innovative business practices can not
only survive but also earn abnormal profits. The strategies adopted by Indigo Airlines to
reduce its operational cost and enhance its revenue.”

Porter’s five/forces model focusses on the following aspects:

1. Threat of existing rivalry in the/industry:

The existing players in the industry are potential threat for Indigo aviation in the form
of switching cost involve for customers.
Very little scope for differentiation in the product offerings. Aviation is a mature
industry and the only/way to grow is by stealing

2. Threat of new entrants:

The new competitors who are looking to enter into the aviation industry may create a
benchmark. The new entrants in the aviation industry can enter by the following
means:
Product differentiation: there is not much difference in the products offered.
Differentiation/can only be/achieved by way of value/added services. Indigo/provides
check-in kiosks, stair-free ramps, and “Q-Busters”. Hence this argument works in
favor of Indigo.
Also the switching cost of Airline Company is quite high, hence a new entrant cannot
exit easy.
 The major entry barriers for a new entrants could be in the form of government
regulations. The new open/sky policy of the government has/encouraged/many new
players/to/enter/the/market.

3. Threat of new products & substitutes:

A completely new product in the market may create a disruption and the industry will
then function in a completely new way.
However, presently the railways are the only substitute available for customers. But
the airways saves time for customers and is a status symbol for many. So only a
stronger low cost provider can replace Indigo.

4. Bargaining powers of buyers of Indigo aviation:

The consumers have the utmost power and it completely lays onto them to decide
whether to buy the product offerings from Indigo aviation or from some of its
competitor in same cost since the switching cost is too low.

“Buyers in airlines industry are large in number and highly fragmented thus lowering
their power .With the growing Indian economy and increasing low cost carriers, the
buyers have increased and so have the growth opportunities Buyers in airlines
industry are large in number and highly fragmented thus lowering their power .With
the growing Indian economy and increasing low cost carriers, the buyers have
increased and so have the growth opportunities”

5. Bargaining power of suppliers of Indigo aviation:

The aviation industry is also dependent upon a channel of suppliers and the prices
offered by them. However Indigo takes care of all its channel partners.
The two major suppliers of aircrafts are Boeing and Airbus
Indigo fleet/comprise/of/Airbus-A320 and/the/switching cost is high due to the
limited number of suppliers.

“The airlines also face a threat of forward integration since the suppliers are in close contact
and are familiar with the knowhow of the aviation industry.”

The suppliers are few and thus in better position to bargain as they always finds customers for
their aircrafts.
SWOT ANALYSIS:
SOWT MATRIX:
Opportunity (O)
Freight market
Jump of domestic air tariffs
International market
Chartered flight services
Promotion of regional air
connectivity
Development of airport
infrastructure
Threats (T)
Rising ATF prices
Increasing competition
Economic slowdown
Poaching
Government interference
Scarcity of trained pilots
Strengths (s)
Indigo as a brand has
awareness and brand equity
Successful low cost strategy
Highly efficient management
for on time arrivals
Continuous innovations
Ease of ticket booking for
customers
SO
Increase domestic destination
for flights
Upgrade to long haul
aircrafts as per demand
ST
Sign an anti-poaching
agreement with competitors
Effective incentive programs
to avoid talent drain
Hire well trained pilots from
other countries as well as
retired air force personnel
Weakness (W)
Low product differentiation
in the industry
Benefits of innovation is low
as can be easily imitated by
competitors
Not present in air cargo
market
WO
Indigo can plan to
international and expand
Indigo can expand its
services to freight/cargo
Diversity of chartered flight
services
WT
Continuous innovation of
value added services
 INTERNAL CAPABILITIES AND STRENGTHS
INTERNALTENVIRONMENTTANALYSIS

Resources,TCapabilitiesTandTCoreTCompetenciesTareTtheTkeyTelementsTofTtheTInternal
TEnvironment.TTheTresourcesTareTtangibleTandTintangible.

TangibleTresources
Aircrafts:

 TTheTairlineTcurrentlyToperatesTmoreTthanT1000TdailyTflightsTwithTaTfleetTof
T216TbrandTnewTAirbusA320TaircraftTandTfliesTtoT50Tdestinations.
HumanTResources:

 WorksTwithT18000+Temployees
 AwardedTAONTbestTemployerT–TIndiaTforT2TconsecutiveTyear
 ‘ExcellenceTinTLearningT&TDevelopment’TAwardTbaggedTbyTIndiGo’sTtraining
sTfacultyTbyTSocietyTofTHumanTResourceTManagement
Fuel:

 Porter’sTfiveTforcesTmodelTdoesTnotTcoverTtheTimportanceTofTcomplementaryT
product.
 ATFTisTtheTcomplementaryTproductTforTairplane,TandTitTconstitutesTapproxima
telyT35%ofTtheTproductionTcosts.

IntangibleTresources

 BrandTEquity/Reputation
IndiGoTisTtheTmostTreputedTlow-costTcarrierTdueTtoTtheTfollowingTreasons:

OnTtimeTarrivalsTisTtheTkeyTdifferentiatingTfactorTforTIndiGoTAirlines.TIndigoTkeeps
TimplementingTnewTandTinnovativeTideasTtoTincreaseTtheTqualityTofTcustomerTservic
e.TRecentTexampleTis:TIndiGoThasTrovingT“checkinTcounters”TwhereTpassengersTwith
TonlyTcabinTbaggageTcanTcheckinTwithTanTIndiGoTofficialTwithThandheldTdevice,Trat
herTthanTliningTupTatTtheTcheckinTcounter.TItTgivesTtheTcustomersTtheTfreedomTtoTc
arryTtheirTownTeatablesTandTsnacksTonTboard.TComparedTtoTtheTdirectTcompetitors,T
thatTis,TtheTotherTlow
costTcarriersTlikeTSpiceJet,TJetlite,Tetc.TIndiGoToffersTtheTlowestTairfare

 SocialTCapital:
IndiGoThasTamicableTrelationshipTwithTtheTotherTorganizationsTthatTcontributeTtoTthe
TvalueTadditionTforTtheTserviceTprovidedTtoTtheTcustomers.TIndiGoThasTengagedTma
nyTTravelTweb-
portalsTandTregionalTtravelTagentsTwithTincentivesTlikeTbookingTcommissions,Tetc.TTh
ereThaveTbeenTnoTinstancesTofTdistressTbetweenTIndiGoTandTitsTotherTcollaborators,T
thatTis,Tsuppliers.TCollaborationTwithThotels:TMumbai-
basedThotelTchainToperatorTSarovarTHotelsTandTIndigoTAirlinesTannouncedTaTmarketi
ngTtie
upTforTfrequentTtravelers.TTheTarrangementTwillTallowTguestsTstayingTatTselectTSarov
arTHotelsTacrossT26destinationsTinTIndiaTtoTavailTaT10TperTcentTdiscountTonTtheirTn
extTtravelTbookingTwithTIndigo.TWhileTIndiGoTflyersTcanTavailTupTtoT25TperTcentT
discountTonTpublishedTroomTtariff,T10TperTcentTdiscountTonTholidayTstayTpackagesT
andT10TperTcentTdiscountTonTrestaurantTdiningTatTselectTSarovarTproperties.THenceTI
ndiGoThasTaTremarkableTSocialTCapital

 BrandTAwareness:
IndiGoTisTaTwell-knownTLow
CostTCarrierTinTIndia.TTheTfollowingTpointsTcontributeTtoTtheTbrandTawarenessTofTI
ndiGo:

AdvertisingTusingTprintTmediaTlikeTnewspapers,Tbillboards,Tetc.TItTmayTnotTpayTforT
anTadvertisementTinTaTnewspaperTbutThasTbeenTcoveredTinTnewsTforTitsTlow-
costTstrategyTimplementation.TAsTIndiGoTprovidesTbetterTvalue-
addedTservicesTtoTtheTcustomers,TWordTofTMouthTpromotionTalsoTworksTinTitsTfavo
r.

 EmployeeTRelationship:
GoodTEmployeeTRelationshipTisTaTkeyTfactorTtoTsustainTcompetitiveTadvantage.TIndi
goTprovidesTseveralTincentivesTtoTitsTemployees.TAsTperTtheTnewsTarticleTpublishedT
inTTheTHinduTBusinessTLine:T“IndiGoTofficialsTclaimedTthatTtheyThaveTbeenTseeing
TaThealthyTgrowthTinTpassengerTnumbersTandThadTnoTplansTtoTdeferTdeliveryTofTan
yTofTtheT100TAirbusTitThasTordered.T“Hence,TitTisTclearlyTevidentTfromTtheTaboveT
statementTthatTIndiGoTisToptimisticTaboutTitsTlong-
termTgrowth.TAlso,TitTisTplanningTtoTexpandTitsTemployeeTstrengthTandTatTtheTsame
TtimeTthereTisTnoTindicationTofTdownsizingTtheTcurrentTstaff.TQuotedTbelowTareTso
meTcomparisonsTaboutTtheTdifferentTapproachesTimplementedTbyTvariousTairlinesTatTt
heTtimeTofTrecessionTstatedTinTtheTsameTarticle:T“AtTaTtimeTwhenTseveralTdomestic
TairlinesTareTlookingTtoTpruneTtheirTstaffTstrength,TtheTDelhi-
basedTlowTcostTairline,TIndiGo,TisTonTtheTlookoutTforTmoreTpilots,TcabinTattendants,
TcustomerTserviceTandTairportTserviceTagents.T”TInTtheTrecentTpast,TbothTKingfisher
TAirlinesTandTJetTAirwaysThaveTaskedTtheirTstaffTtoTleave.TWhileTJetTAirwaysToffer
edTaT“voluntaryTretirementTscheme”TtoTmoreTthanT300TofTitsTStaff,TitTwasTalsoTpla
nningTtoTlayToffTaboutT1,900TofTitsTstaff.TInTlateTSeptember,TKingfisherTannounced
TthatT300TemployeesThadT“partedTways”TwithTtheTcompany”.TTheTaboveTfactsTshow
TthatTIndiGoThasTtakenTaTpositiveTapproachTwhileTdealingTwithTitsTloyalTemployees
TatTtheTtimeTofTeconomicTslowdown.

-RecognizedTasT‘GreatTPlaceTtoTWorkTforTinTIndia’TforT8TyearsTinTaTrowT(2008-
T2015)

-NamedTasTAon’sTBestTEmployerTforTtheTyearT2016TandT2017

STRENGTHS

 IndiGoThasThighTbrandTawarenessTandTbrandTequity.
 CostTleadership:TSuccessfulTimplementationTofTlow-costTstrategy.
 HighlyTefficientTmanagementTthatTensuresThighTrateTofTon-TtimeTarrivals.
 ContinuousTinnovationTtoTimproveTonTnon-priceTfactors.
 Tie-upTwithThotels.
 EaseTofTticketTbookingTforTcustomers.
 OnlyTLCCT(lowTcostTcarrier)TtoTmakeTconsistentTprofits
 ItThasToneTofTtheTmajorTairlinesTinTIndiaTinTtermsTofTmarketTshare
 LCCTwhichThasTenteredTinternationalTmarketsThasTboostedTitsTbrandTvalue
 GoodTadvertisingTandTmarketingTstrategiesThaveTincreasedTitsTbrandTrecall
 RankedTasToneTofTtheTtopT5TairlinesTgloballyTinTtermsTofTOn-
timeTperformanceT(OTP)
 BestTlow-costTairline,TCentralTAsiaT/TIndiaT–T8TyearsTinTaTrow
 Travelers’TChoiceTawardTbasedTonTcustomerTreviews-TTripTAdvisorT
 STRATEGY – CORPORATE / BUSINESS / FUNCTIONAL

STRATEGIES AT VARIOUS LEVELS

CORPORATE
STRTEGY

BUSINESS STRATEGY

FUNCTIONAL STRATEGY

Corporate Level Strategy

Corporate strategy which is the highest level of strategy is formulated at the top level deals
with the long term objective of the organization and focus on the scope of an organization
and how value will be added to different parts of the organization.

Indigo has 216 planes for 66 destinations including 51 domestic and 15 international
destination. Instead of waiting in long queues for check-ins, Indigo introduced Check-in-
counters so instead of waiting in lines, passengers can check in on Indigo official with a
handheld device. Indigo offers 10% discount on the next travel booking if passengers had
stayed in any of its tie-up hotels. While other airlines are cutting down staff strength, Indigo
is speeding up its recruitment process by hiring more pilots, cabin crew and supporting staff.
Though other airlines have been increasing their salary scale Indigo on the other hand is
offering quite less in comparison of its competitors. The contracts are being renewed every
two years. As almost 75% of the airline monthly bill accounts for the crew salary Indigo is
not just cutting down its operating cost but also its salary scale.
Business Level Strategies

An organization main attention should be satisfying its customers needs or preferences in

order to achieve maximum returns. This is achieved by business level strategy which take
actions to provide value to its customers and gain competitive advantage by exploiting core
competencies in specific, individual product and service markets. Its primary focus is on
firms position in an industry, relative to its competitors and to the five forces of competition.

Talking about Indigo doesn’t force its passengers to purchase something they might not be
interested in buying. Passengers can buy food and drinks at an affordable price when they are
on board from the cabin crew or from their website before the flight. Passengers travelling by
Indigo need not need to worry about collecting tickets before travelling as Indigo follows
ticketless policy which helps them keep the costs down (less paper, lower printing and
distribution costs). Guests receive their boarding pass beforehand and no last minute seat
change are allowed. If the guests are interested in selecting their own seats they can go with
their “Pick-a-Seat” feature and select a seat of their preference on the aircraft. Passengers are
encouraged to check in online so as to save time instead of wasting it at the check 9in
counters at the airports. Indigo offers no refunds if a passenger fails to show up or miss their
flights as a lot of time, money and resources are wasted due to refunds and rescheduling
when passengers don’t get on board.

Functional Level Strategies

The main focus of functional level strategy is that of its day to day activities which is
formulated for the implementation of corporate and business level strategy. They are
according to the guidelines of the top level management.

Indigo functional level strategy can be described in below mentioned:

 OPERATIONS

A) Single type of aircraft

Indigo’s whole fleet consists of A-320-232 aircraft while Air India, Jet Airways and
SpiceJet use 10, 9 and 3 diverse types of aircraft respectively. This result is in
superior flexibility by making use of the same crew from pilots to flight attendants to
the ground force thereby reducing hiring, training and up gradation costs.

B) Single Class
Having only Economy class means that Indigo does not have to spend time, money
and crew on privilege passengers. They also don't need to maintain expensive lounges
at airports further reducing costs.
C) Low average fleet age
Indigo has an average fleet age of less than 3 years. A younger fleet means a smaller
amount maintenance costs. Indigo plans to maintain a lesser fleet age as all its aircraft
are leased for a period of 5-6 years. This way they avoid the D-Check which is
completed after 8 years of maneuver of an airplane. (“A D-check may take up to 2
months during which the aircraft remains out of service.”)

D) Route Planning (Note: The data discussed pertains to year 2016)

Indigo operates over a less important number of end point than its competitors but
with a higher frequency - with a fleet of 78 planes for 36 destinations while Spice Jet
flies to 46 destinations with 58 planes. The network maps show that all Indigo's
destinations are connected to at least two cities while most are associated to 3 or more
destinations, whereas this is not the case with Jet Airways. This means Indigo can
retain its aircraft in the air for a longer period of time and save up on airport charges.
For the reason of this Indigo has a high aircraft operation rate of more than 11.5 hours
per day per plane. This as well means that customers don't have to look for connecting
flights with other competing operators.

E) Tightly framed maintenance contracts:

Indigo has a Power by the Hour contract with International Aero Engines (IAE),
which provides the engines that put the onus of presentation delivery on the
manufacturer.” Indigo has parallel agreements with Airbus, as well as with the
vendors for other important components. These contracts undoubtedly come at a
premium, but it means that Indigo does not have to pull out planes from service for
repairs and also does not have to keep a large inventory of spares

F) Other cost-cutting measures

i. Turnaround time - An airline is charged for the time duration its aircraft stays at the
airport. Indigo has a quickest turnaround time (“time taken between landing and the
next take-off”) of 30 minutes. Having a single make of aircraft again helps in this
regard as the time taken by the crew gets optimized.

ii. Employee Aircraft ratio - Lower employee aircraft ratio of 102 compared to Jet
Airways’ 130 and Air India's 262.

iii. Stage Length - Average Stage length (flying time per flight) of 1.5 hours, which
means not having to stock and serve hot meals in most flights. This again contributes
to the low turnaround time.

iv. Most Indian airlines take delivery of aircraft by sending their own pilots and
engineers (to Toulouse in the case of Airbus). Indigo prefers to get them delivered to
 Delhi, this is expensive, but it also leads to better application of the existing pilots and
the engineering crew.

 Marketing
Indigo spends very little amount on its advertising. It only started advertising heavily
when they started with international operations and took advantage of the decline of
Kingfisher airlines by using the catchphrase like “Let the bad times roll... Fly Indigo in
good times and in bad times”. Though Indigo was criticized for this move but it
eventually worked in their favor. Today, Indigo has the highest market share of 41%
compared to its competitors and has retained its position as the market leader among
domestic airlines carrying passenger load of 46.73 lakh locals passengers.
 BALANCE SHEET
Balance Sheet of Interglobe Aviation ------------------- in Rs. Cr. -------------------
Mar 18 Mar 17 Mar 16 Mar 15 Mar 14

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 384.41 361.47 360.36 30.70 30.70
Preference Share Capital 0.00 0.00 0.00 3.67 3.67
Total Share Capital 384.41 361.47 360.36 34.37 34.37
Reserves and Surplus 6,693.04 3,417.75 2,362.83 386.32 387.37
Total Reserves and Surplus 6,693.04 3,417.75 2,362.83 386.32 387.37
Total Shareholders Funds 7,077.45 3,779.22 2,723.18 424.37 421.74
NON-CURRENT LIABILITIES
Long Term Borrowings 2,241.37 2,395.71 3,007.07 3,588.40 3,080.74
Deferred Tax Liabilities [Net] 369.53 161.81 146.78 409.14 52.86
Other Long Term Liabilities 5,121.12 3,966.02 2,975.02 3,348.70 2,661.22
Long Term Provisions 196.89 122.39 86.23 52.29 36.83
Total Non-Current Liabilities 7,928.91 6,645.93 6,215.10 7,398.52 5,831.65
CURRENT LIABILITIES
Trade Payables 1,000.16 774.59 741.23 475.48 382.76
Other Current Liabilities 5,019.58 3,943.31 2,882.44 2,320.70 2,002.78
Short Term Provisions 103.25 66.71 56.74 152.85 464.51
Total Current Liabilities 6,122.99 4,784.61 3,680.41 2,949.03 2,850.05
Total Capital And Liabilities 21,129.34 15,209.76 12,618.69 10,768.25 9,103.44
ASSETS
NON-CURRENT ASSETS
Tangible Assets 4,534.76 3,747.47 4,727.43 4,866.40 3,940.72
Intangible Assets 44.05 46.37 19.97 9.64 15.25
Capital Work-In-Progress 29.42 23.30 23.73 0.45 0.00
Intangible Assets Under Development 3.07 1.88 8.23 0.00 0.00
Fixed Assets 4,611.30 3,819.03 4,779.37 4,876.49 3,955.97
Non-Current Investments 0.13 0.03 0.03 0.05 0.05
Long Term Loans And Advances 683.13 544.03 421.72 1,118.13 801.21
Other Non-Current Assets 1,203.28 1,400.27 1,810.06 1,605.56 1,431.52
Total Non-Current Assets 6,497.84 5,763.35 7,011.18 7,600.23 6,188.74
CURRENT ASSETS
Current Investments 6,343.91 3,713.41 986.13 516.75 1,271.48
Inventories 183.23 163.15 76.28 130.55 67.29
Trade Receivables 226.32 158.70 157.11 104.55 89.12
Cash And Cash Equivalents 6,580.60 4,632.54 3,718.67 1,999.38 1,101.53
Short Term Loans And Advances 191.50 3.98 9.05 155.56 223.13
OtherCurrentAssets 1,105.95 774.63 660.27 261.22 162.14
Total Current Assets 14,631.50 9,446.41 5,607.51 3,168.01 2,914.69
Total Assets 21,129.34 15,209.76 12,618.69 10,768.25 9,103.44
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 150,374.33 143,536.88 148,787.84 58,804.48 57,923.22
 PROFIT AND LOSS ACCOUNT

Profit & Loss account of Interglobe Aviation ------------------- in Rs. Cr. -------------------
Mar 18 Mar 17 Mar 16 Mar 15 Mar 14

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME
Revenue From Operations [Gross] 22,500.52 18,440.07 16,042.49 13,925.34 11,116.58
Revenue From Operations [Net] 22,500.52 18,440.07 16,042.49 13,925.34 11,116.58
Other Operating Revenues 520.37 140.43 97.42 0.00 0.00
Total Operating Revenues 23,020.89 18,580.50 16,139.91 13,925.34 11,116.58
Other Income 946.86 789.07 515.12 394.58 315.53
Total Revenue 23,967.74 19,369.57 16,655.03 14,319.92 11,432.12
EXPENSES
Purchase Of Stock-In Trade 123.88 123.83 114.78 81.71 58.40
Aircraft Fuel Expenses 7,760.14 6,341.51 4,779.32 5,748.49 5,513.35
Aircraft Lease Rentals 3,610.20 3,125.37 2,506.76 1,952.24 1,670.31
Changes In Inventories Of FG,WIP And Stock-In
1.27 -0.29 -1.13 -3.17 0.71
Trade
Employee Benefit Expenses 2,455.02 2,048.19 1,787.98 1,188.69 920.55
Finance Costs 339.82 330.78 304.12 115.53 122.58
Depreciation And Amortisation Expenses 436.88 457.25 505.47 302.21 226.01
Other Expenses 6,113.88 4,798.58 3,834.22 3,087.70 2,446.63
Total Expenses 20,841.07 17,225.23 13,831.52 12,473.40 10,958.54
Mar 18 Mar 17 Mar 16 Mar 15 Mar 14

12 mths 12 mths 12 mths 12 mths 12 mths

Profit/Loss Before Exceptional, ExtraOrdinary

3,126.68 2,144.34 2,823.51 1,846.52 473.58
Items And Tax
Profit/Loss Before Tax 3,126.68 2,144.34 2,823.51 1,846.52 473.58
Tax Expenses-Continued Operations
Current Tax 668.98 491.15 730.39 388.98 92.99
Less: MAT Credit Entitlement 0.00 0.00 0.00 201.49 92.99
Deferred Tax 215.32 -6.00 106.95 354.86 -0.86
Total Tax Expenses 884.30 485.15 837.35 542.35 -0.86
Profit/Loss After Tax And Before ExtraOrdinary
2,242.37 1,659.19 1,986.16 1,304.17 474.44
Items
Profit/Loss From Continuing Operations 2,242.37 1,659.19 1,986.16 1,304.17 474.44
Profit/Loss For The Period 2,242.37 1,659.19 1,986.16 1,304.17 474.44
Mar 18 Mar 17 Mar 16 Mar 15 Mar 14

12 mths 12 mths 12 mths 12 mths 12 mths

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE
Basic EPS (Rs.) 60.03 45.94 58.06 42.48 15.45
Diluted EPS (Rs.) 59.90 45.85 56.39 37.94 13.80
VALUE OF IMPORTED AND INDIGENIOUS RAW
MATERIALS
STORES, SPARES AND LOOSE TOOLS
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 1,229.73 542.20 1,102.65 1,079.69 377.58
Tax On Dividend 250.34 110.38 224.48 211.42 64.17
Equity Dividend Rate (%) 60.00 340.00 150.00 3,517.00 1,230.00