Indigo (Domestic

airlines)
 BACKGROUND

IndiGO is the India’s largest passenger airline with a market share of

46.9percent as of March 2019.

The company primarily operates in India’s domestic air travel market as a

low –cost carrier with focus on three pillars – offering low fares, being on
time and delivering a courteous and hassle free experience.
 IndiGo is a oligopoly market

 An oligopoly exists when a market is controlled by a small group of

firms, often because the barrier to entry is significant enough to
discourage potential competitors.

 Oligopolies may be identified using concentration ratio, which measure

the proportion of total market share controlled by a given number of
firms. When there is a high concentration ratio in an industry,
economists tend to identify the industry as an oligopoly.
 Main characteristics of
Oligopoly

1. Nterdependence Among firms

2. Advertising

3. Competition

4. Barriers to entry of firms

5. Lack of uniformilty

6. Existence of price rigidity

7. Indeterminateness of demand curve.

 Dynamic pricing

Dynamic pricing, also referred to as surge pricing, demand pricing, or

time –based pricing is a pricing strategy in which business set flexible
prices for products or services based on current market demand.
 Role of dynamic pricing in
domestic airlines companies

 There are 2 sides to it:

 One is revenue management and one is pricing. The capacity of the aircraft is divided
in multiple booking classes (20 or more) that are “nested”. The nesting is the fact
that with 100 seat available we can allocate 50 seats to the cheapest and 50 seats
to the more expensive. If we sell an expensive seat first it will reduce the number of
seats on the lowest class until there are no more. We call the allocation: protection.
 For those classes, we allocate prices, the prices have different conditions (booking in
advance minimum stay at the destination, one way/round trip etc) each “booking
class* condition” has a fare basis code associated with it with a different $value.
 The airline will both play with booking classes allocation and the fare levels
SWOT Analysis of IndiGo
 Strength in the SWOT analysis
of indigo

1. Positive image :indigo has carved an image of being most efficient low fare
operator not just in the domestic market but also globally.
2. Services : indigo offers a wide gamut of services such as multi channel direct
sales, online booking, round the clock customer support through call centers etc.
3. High stakeholder engagement: through a robust customer interface indigo
ensures that it keeps track of customer needs and also communicate to every
customer in regular basis.
4. High drive workforce: indigo is a hassle free place to work in and this ensured
that they have a higly motivated workforce
5. Fleet strategy the fleet strategy of indigo has always focused on ensuring that
the average fleet age in four years.
 Weaknesses in the SWOT
analysis of indigo

1. Sustaining profits: indigo is positioned as a low-cost carrier and this

pricing for the airline needs to be as low as it can be managed. At the
same time, the costs need to be maintained as low as possible.
2. Over-dependence on volumes: In order to sustain profits the company
needed to ensure that the volumes were always high and business
could not be affected by fluctuations in demand.
3. The Grounding of aircraft: after the safety of pratt &Whitney aircraft
became questionable, the civil Aviation Authority had to make a
decision to ground these airplane owned by indigo. This scandal
affected the goodwill and trust of the customer.
 Opportunities in the SWOT
analysis of indigo

1. Growing demand for foreign travel: there is a surge in the number of

people in India who need to travel to foreign locations both for business
and pleasure. This means that there is a huge scope for the airline to
expand to more foreign destinations.
 Threats in the SWOT analysis
of indigo

1. Competition: the airline faces a lot competition from brands such as jet
Airways, Indian airline, Air India etc.
2. Costing: The key components of cost in an airline is the fuel which is
highly Fluctuating and in order to manage the pricing in accordance
with the dynamics of fuel prices is a threat today and even in the
future.
 Price elasticity of Demand of
IndiGo

 Going by the definition, price elasticity of demand is measure of responsiveness of

consumers to change in the price of a product. An airline industry is extremely price
elastic which means that the passengers can easily choose a different carrier without
having a brand loyalty
 IndiGo airline although being a low –cost carrier is relatively elastic. Significant changes
in price will have a considerable amount of impact in the demand as indiGo offers only
economy seats.. Indigo having significant domestic market share (,41.3%) due to it’s
efficient, low cost operations by attracting customers with low fare. Only economic seat
and implementation of non price competition are also factors enabling the low cost
operations of indigo. Indigo and any airline industry usually cannot reduce the price just
to increase the number of customers or vice-versa, as this will not lead to a significant
impact. Considering indiGo’s major domestic market share, the price elasticity of
demand coefficient for domestic air tickets for indiGo is less compared to the Peeps of
other airlines offering domestic services.
PESTEL Analysis OF IndiGO
 Political factors of IndiGo

 Indigo airlines case pestel analysis has a clean and corruption free
image. It is amongst the least corrupt nations of asia. Although, some
political processes are lacking, along with civil liberties and human
rights. Workers party succeeded in 2011 election, which might be
damaging to indigo airlines case pestel analysis image considering that
this party might decline to apply the procedures.
 Economic factors of IndiGo

 Indigo airlines case pestel analysis includes qualified labor force and
has high levels of Conserving. Indigo airlines case pestel analysis‘s port
is among the largest recognized port by trade volume with beneficial
taxation system. Indigo airlines case pastel analysis relies a lot on
export and tourism. It does not have any resources of raw material.
Indigo airlines case pestel analysis is essentially a link between east
and west.
 Social factors of indiGo

 The 55% of indigo airlines case pestel analysis’s population lies

between 25 and 54.literacy rate is very high and it has 4 th least
expensive baby mortality rate the 100% population of indigo airlines
case pestel analysis is urban with the most affordable number of kids
per woman worldwide. Life span rate of indigo airlines case pestel
analysis is 84 years. Population growth rate of indigo airlines case
pestel analysis is low.
 Technological factors of
indiGo

 Indigo airlines case pestel analysis has biggest telecommunication

networks all around the world, with the seamless connectivity. It has
world’s busiest port and is thought about as a logistic center.
 Legal factors of IndiGo

 Advanced monetary guideline are indicated in the country and has a

transparent legal environment. English can be adopted as the legal
custom. Legal advancement can be made.
 Literature study –Demand
curve of indigo in market
Profit margin of indiGo
 Financial results and financial
results from past few years
IndiGo Airlines growth
Growth rate of indigo
 Conclusion

 Indigo airlines has definitely been a success story . The road ahead for
indigo is going going to be tough. As per SWOT analysis, and some
where pestel also, new entrants are a treat and indigo had to tackel it..
 Indigo has been able to remain profitable and grew it’s market share
since inception. However it is still a relatively young airline
 It has to prove that low cost model can remain profitable in long run.
Reference for the project

 Casemess. Com
 Marketing G91
 Goindigo.com
 Thank you 🙂

 Name –shruti kumari

 Roll- BBA BA 001