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IndiGo Airlines
(Indian Aviation Industry)
IndiGo was set up in early 2006 by Rakesh Gangwal and Rahul Bhatia, of
Inter Globe Enterprises. Inter Globe holds 51.12% stake in IndiGo and 48%
is held by Caelum Investments, a Virginia, US based firm, run by Rakesh
Gangwal.
IndiGo placed a firm order of 100 Airbus A320-200 aircraft during June
2005 in plans to commence operations in mid-2006. Former US Airways
Executive vice-President and Marketing and Planning Bruce Ashby joined
IndiGo as its Chief Executive Officer. The airline already acquired parking
lots for its brand new aircraft at both Mumbai and Delhi airports. By the
time they announced the first flight, they had already scheduled their first
20 aircraft.
IndiGo took delivery of its first Airbus A320-200 aircraft on 28 July 2006,
nearly one year after placing the order, and commenced operations on 4
August 2006 with a service from New Delhi to Imphal via Guwahati. By the
end of 2006, the airline had six aircraft. Nine more aircraft were acquired
in 2007 taking the total to 15. By December 2010, IndiGo
replaced the state run flag carrier Air India as the top third airline in India.
It
already
had
17.3%
of
the
market
share,
behind Kingfisher
September
2011. Over
the
following
weeks,
the
OBJECTIVE
To understand how IndiGo airlines managed/s to give profits for many
consequent years, when other Indian airlines (especially Kingfisher
Airlines) were in red (showing big loses) and to give Indigo airlines
suggestion/s on how to keep their profits up (future) in line with their
current strategy.
RESEARCH FINDINGS/OUTCOMES
IndiGo airlines have managed to break even 2 years from its operations
start day, after which it has given/giving profits in subsequent years.
Other Indian airlines have been racking up losses, while IndiGo airlines are
posting profits since 2009. In March 2013, it reported net profits of $130
million on revenue of $1.6 billion. All this at a time when crude oil price
were increasing rapidly, keeping operations cost low was almost
impossible, recession was knocking at the door and there wasnt a
majority
government
at
the
centre.
In
addition,
there
were/are
(2012)
A320neo
which
claims
to
deliver
15%
less
fuel
place
order
on
aircraft
Tried to give world class cabins, lounges and in aircraft services (IFE
system on each seat and hot meals).
Made too many changes in their business models and strategies
which led to their weakness (wanted to expand and make profits too
fast) as, they couldnt stabilize.
Merged with loss making airlines.
*Note: Did not have access to Indigo Airlines or Inter Globes financial
statements instead got the data through reference sites. Do not know the
exact figures of loan taken by the following enterprises and their financial
sources.
REFERENCES
https://strategicmoves.wordpress.com/2013/10/31/indigo-airline-cracking-
the-profitability-code/
http://www.firstpost.com/business/5-reasons-why-indigo-is-market-leader-
today-424550.html
http://www.forbes.com/2010/11/03/forbes-india-how-rahul-bhatia-found-
indigo-gold.html
http://www.firstpost.com/business/indigos-secret-profit-mantra-is-about-
getting-customers-to-do-part-of-its-job-2330804.html
http://www.delhibusinessreview.org/v_14n1/dbr_v14n1rr_p_123-
125_(Casestudy).pdf
https://books.google.co.in/books?
id=codEBQAAQBAJ&pg=PA347&lpg=PA347&dq=how+did+indigo+airlines
+manage+profits+why+how&source=bl&ots=6E21ec8glS&sig=HCEBDBV
GQK2I48TzdqeDkZ7sBns&hl=en&sa=X&ei=TSKcVdjeNoTdmAWKmKvwBQ
&ved=0CCEQ6AEwATgo#v=onepage&q=how%20did%20indigo
%20airlines%20manage%20profits%20why%20how&f=false
https://books.google.co.in/books?
id=0arUQFLm8qUC&pg=PT163&lpg=PT163&dq=how+did+indigo+airlines
+manage+profits+why+how&source=bl&ots=Whtko_qmIB&sig=IqzpOa4F
rqblbR8U30lIzLPdPzE&hl=en&sa=X&ei=4SGcVaJ4qIDMA7nusJgL&ved=0CD
AQ6AEwAzge#v=onepage&q=how%20did%20indigo%20airlines
%20manage%20profits%20why%20how&f=false
http://www.icmrindia.org/Short%20Case%20Studies/Business
%20Strategy/CLBS120.htm
http://www.business-standard.com/article/companies/what-keeps-indigo-s-
profit-flying-high-113100901248_1.html
http://timesofindia.indiatimes.com/business/india-business/IndiGo-lone-
profit-maker-among-Indias-big-airlines/articleshow/44828363.cms
http://www.livemint.com/Companies/ldcfXU0xzAIoqvDCA2LtiK/IndiGo-
reports-sixfold-jump-in-net-profit-to-787-crore-in.html
http://simpliflying.com/2009/what-makes-indigo-airlines-on-of-the-best-
budget-carriers-in-india/
http://www.rediff.com/business/slide-show/slide-show-1-a-tale-of-two-
airlines-kingfisher-vs-indigo/20120221.htm
http://www.hindustantimes.com/sectorsaviation/surprise-nearly-half-of-
indigo-foreign-owned/article1-823860.aspx
http://www.marketing91.com/marketing-mix-indigo-airlines/