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Published by:
Amity Research Centers (2016)
18 pages
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Indigo started its voyage as a Low Cost Carrier (LCC) in 2006, when all other airlines were struggling with fall in demand. Since then, IndiGo aggressively pursued route expansion to consolidate its presence in the Indian commercial aviation market. According to the Centre for Asia Pacific Aviation (CAPA), from 2009 to 2013, IndiGo had made a cumulative profit of INR 22 billion. In contrast, the civil aviation industry as a whole was facing cumulative losses of INR 460 billion, for the same period. Even IndiGo’s nearest competitors - Jet Airways and SpiceJet together reported a loss of INR 6.71 billion in FY 2013. Industry experts opined that the innovations made in the business model such as on time performance, simplicity, hassles-free philosophy, service at economy rates, sale and leaseback of aircraft, cleanliness, fleet of young aircrafts (average age below three years), cooperative crew members and quick turnarounds of less than 30 minutes between flights, have aided IndiGo to fly with profitability. With an operational philosophy of ‘low fares do not mean low quality’, IndiGo had decided to go for an Initial Public Offering (IPO) to raise USD350 – USD400 million to fund its expansion in 2015. But, the arrival of successful Asian low-cost carrier AirAsia and expansion of global airlines such as Singapore Airlines, Etihad, and Tiger Airways, in association with the respective Indian partners, the Tata Group, Jet Airways and SpiceJet, had triggered new challenges for IndiGo. Amidst such scenario, would IndiGo be able to sustain its innovative business model to remain as India’s most profitable LCC, in the long run?
Learning objectives:
1. The Emergence and Growth of IndiGo. 2. IndiGo’s Innovative Business Model. 3. Future Challenges.
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