IndiGo Airlines: Market Plan

H4G9 – Great Lakes Institute of Management

Executive Summary
 India’s best performing Low Cost Airline in terms of
profit
 Established in 2005 as a subsidary of Interglobe
Interprises
 A fleet of 30 aircrafts making 170 flights daily, across
22 destinations in India
 Plans to acquire 125 new aircrafts by 2025
 Plans to serve 100 cities in India, South East Asia,
Middle East and China by 2025
The IndiGo Dream…
Why IndiGo ?
 Emergence of the Great Indian middle class willing to
spend money for swifter travel
 For the Individual on the Go,who values time and on-
timliness
 Budget travel is not cheap travel, Quality of Service

Mission Statement :
To be the best Airline in India by providing the following values to the
customer:
- Affordable Fairs
- Ontime performance
- Hasslefree Service
Situation Analysis
Macro Environment Analysis: Political
 Open Sky Policy
 Deregulations in different spheres
 Low entry barriers to attract new companies
 FDI limits
 49 % for airlines
 100% for airports
 Extensive airports development planned
Macro Environment Analysis: Economic
 Rising income of middle class
 GDP growth of more than 8% and expected rate
in two digits
 Average salary increase highest, 14% in the world
 Tourism industry growth: 6 % in 2009
Macro Environment Analysis: Technological
 Modernization of Airports
 Better handling of Aircrafts, passengers & cargo
 Developing Greenfield airports with Corporate
collaboration
Macro Environment Analysis: Social & Cultural
Rising middle class:
 1993 - 1999 : 39.5 to 56.7 million
households
 2005: 300 million households
 2010: 400 million households
(Estimated)
Leisure travel increased by 15 % in 2009
Number of foreign tourists in 2009-2010: 5.1
million
Status symbol to travel in plane. Glamour.
Macro Environment Analysis: Demographic
Changed travelling pattern of consumers
Highest percentage people in age group 20-25
Educational environment being improved
Shift towards nuclear family concept increases
travel frequency
Middle class income above Rs.90,000 pa
(Source: NCAER)
High energy cost. The cost of ATF in India for
domestic airlines is almost double than that in
the international market
 SWOT Analysis

Weaknesses Opportunities Threats

Strengths Less
Less Freight
Freight market
market High
High ATF
ATF
High Increased
Increased
High Brand
Brand Differentiatio
Differentiatio prices
prices
Awarness n Domestic
Domestic Air
Air Competitors
Awarness n Competitors
traffic
traffic
Cost
Cost Too
Too many
many Economic
Economic
International
International
Leadership
Leadership players
players Slowdown
Slowdown
Markets
Markets
High
High Short
Short lived
lived Chartered Poaching
Poaching
Chartered
Efficiency
Efficiency innovations
innovations services Government
Government
services
Innovation
Innovation Untapped
Untapped Regional
Regional
policies
policies
Tie
Tie Ups
Ups domestic
domestic connectivity
connectivity Scarcity
Scarcity of
of
Hassle
Hassle Free
Free cargo
cargo Airport
Airport pilots
pilots
segment
segment upgradation
upgradation Cost
Cost inflation
inflation
Segmentation, Target & Positioning

People for
Cargo
Buisness People for
Services
travel Buisness
travel

Leisure
Leisure travel/Hol
Charter
travel/Holid iday
Airways
ay
New Market Expansion
Buddhist Circuit Kolkata, Bodhgaya, Patna, Varanasi
●

Tamil Nadu Chennai, Madurai, Coimbatore

●

Andhra Pradesh Vijaywada, Vishakhapattnam

●

Madhya Pradesh Bhopal, Raipur, Indore

●

Karnataka Belgaum, Mangalore

●

Punjab Chandigarh, Amritsar

●

Andaman Port Blair

●
Basis for Segmentation
 Geographic
- Region, Rural and Semi-urban areas
 Demographic
- Income, Occupation, Education
 Psychographic
- Socioeconomic Classification, Lifestyle
 Behavioral
- Occasions, Benefits, Usage Rate
Additional Characteristics of Target Market
 Socio-economic revolution is underway.
 Increase in income of Middle class and increase in volume
of affluent sections of society.
Strategic Focus and Plan
Core Competencies
One type of airplane - brand-new Airbus A320s
One type of fare - low
One type of customer service - professional
One type of route - serving destinations within
India
One way to deal with delays and cancellations –
honestly
Sustainable Competitive Advantage

Costly to Easy to
Resources Value
Imitate substitute
Aircrafts High No No

Human Resources No No
High

Brand Equity Yes No

High
Social Capital Yes No

Employee High
No No
relationship

Fuel High No No
Market Strategy
Be visible – go all out to project yourself as the
Future Market Leader
Go Local – Connect with the Middle class
Focus on your Core Competencies and market
them
Aim to compete with Railways in the long run
Market Research
The Five Indian Flyers: Market Share (Mar 2008)

17.8% 14.7%
11.9% IndiGo
spiceJet
26% Kingfisher
23% JET AIRWAYS
AIR INDIA
The Five Indian Flyers: Business
The Five Indian Flyers: Financials
The Indian Flyers: Customer Satisfaction
Consumer Preference
 Competitive Forces
Volatile
Prices
Volatile

Multiple Market
Prices

Players
Highly

Multiple Market
Oil Oil

Players
Highly

Highly
Competitive Prices

Threat
Entrants
Potential
Price Ceiling

Threat
Entrants
Potential
Ceiling
Limited
Price

from
Limited

from
Pricing Strategy
Market Penetration and Price Differentiation
 Low Cost And High Quality of Service
 Price to be diffrentiated with respect to days before
the travel.
 High seating density and load factor.
 No frills such as ‘free’ food/drinks or lounges
 Targeting segments locally based on seasons and
festivals
Components of Pricing
 Base Fare
 User development Fee (based on airports)
 Air Fuel Surcharge (Variable on ATF Prices)
 Passenger Service Fee
 Load Factor ( Average Seat Per Mile)
 Ticket booking prior to travel based on number of
days.
Price Determination
Kolkata to Bodhgaya/ Chennai to Coimbatore (425
KM):
1) Passenger Service Fee Rs 225
2) Fuel Surcharge Cost
ATF Prices Rs 47843.50 / KL
Average seat capacity 180
Load factor 70% (125-135 occupancy)
Average mileage 2.9625 L/ km
ATF cost per passenger Rs 480
Crew members 2 pilots + 4 airhostess (Rs 6.5 lakhs/100
hours) = Rs 52/ person
Capital cost Rs 2.25 Crores/ month as cost of the
Plane (Maintenance + Insurance)
Assuming 1 flight per day Rs 1466
So overall the Fuel surcharge
Cost per seat Rs 480+ Rs1466+ Rs52 = Rs 2008
3) Base Fare : Minimum Base fare of Re 101 which would change based
on the days booked prior to Travel
Price Differentiation of Base fare based on day
of booking prior to Travel

More than 15 days Within 14 days of With in 7 days of

prior to travel Travel travel
With other fixed, The Base fare The base fare
Base fare would could upto reach could reach upto
vary 101-501 upto 1500s 4500
Promotional Strategy
Communication Objectives-Indigo will be promoting
the below three things majorly as part of its advertising
programme-On-time performance , Affordable fares and
Hassle free passenger experience.
Advertisement Strategy
 Hoardings at airports with focus on Best on time
performance
 Advertisement through social networking medium-
Facebook,Twitter,YouTube etc
 Collaboration with Multiplexes in major cities to
promote the airline and its special offers
 Advertisement hoardings in multi-storeyed buildings
and offices
 Advertisements in magazines targetting Urban
population
Advertisement Strategy contd..
 Sponsering fashion shows, talent hunts, New Year
parties etc
 Collaboration with consumer banks, credit card
companies, hotels, ticketing websites to promote
special offers, discounts and cash back
 Giving IndiGo promotion a local flavour by promoting
in regional languages in respective sectors
 Sending special offer details to frequent fliers by sms,
email etc
 Targeting foreigners in Tourist circuits
Advertisement through Social Media
The IndiGo Advantage
 Multiple Short haul point to point flights
 Using only one type of aircraft to minimize
Maintenance overheads
 Lean Operating Strategy to maximize efficiency
 Minimum turn around time, keeping Aircraft in air
for most of the time
 Employee welfare and resultant loyalty
 Making Low budget flying a pleasant experience
References
 IndiGo Airline - www.goindigo.com
 Interglobe – www.interglobe.com
 India Ministry of Civil Aviation - http://civilaviation.nic.in
 India Directorate of Civil Aviation - http://dgca.nic.in
 Airport Authority of India - www.airportsindia.org.in
 Wikipedia – www.wikipedia.org
 Bureau of Civil Aviation Security (India) – http://bcasindia.gov.in
 http://www.ibef.org/industry/aviation.aspx
 Outlook Magazine
 Indian Railways www.indianrail.gov.in
 - Priyank
- Purnendu
- Rachna
- Rahul Raj
Thank You - Rahul Jain