Moneycontrol PRO
Upcoming Webinar:Moneycontrol Pro in association with Quants League Sep'21 Edition brings to you to 5-Days Live Algorithmic Options Trading Virtual Conference. Register Now!

IndiGo’s 15th anniversary—an exemplar of endurance in the graveyard of airlines

IndiGo launched its first flight 15 years ago. It has survived, even thrived, in all these years when more fancied competitors have collapsed. What is the secret of its longevity?

August 04, 2021 / 12:22 PM IST
IndiGo launched its first flight 15 years ago on August 4.

IndiGo launched its first flight 15 years ago on August 4.

IndiGo, India’s largest carrier by fleet, domestic market share and yes, cash, completes 15 years of operations today. The airline started a year later than much famed Kingfisher Airlines and has built itself into a mighty enterprise, one flight at a time.

In an industry where only two airlines have survived the first wave of liberalisation—even they were forced to merge with each other— and the likes of Kingfisher Airlines had to fold up, survival for 15 years, and turning in profits for most of those years, is an incredible achievement.

For years, airlines in India and abroad have looked at RyanAir, Easyjet, Lion Air or AirAsia as a model to benchmark and replicate. IndiGo has slowly but steadily made its place in that group and being the only airline economics model from India. In fact, the airline now has a larger fleet than the entire AirAsia group.

Flashback

At a time when Kingfisher was riding a slow death and facing engine issues and challenges, many questions were raised on how IndiGo with the same engines and the same aircraft was making things work for itself. A key tactic centered on the water-tight contracts which the airline had signed with all its vendors including aircraft and engine OEMs.

Close

It is another matter that the airline was hounded by engine issues a decade later. This time with the Pratt & Whitney engines on its A320neo which caused air turn backs and in-flight engine shut downs!

What worked

IndiGo had a simple strategy of selecting a market and flooding it with flights from all possible stations. Starting with its hub Delhi and connecting it with Mumbai and then Bengaluru, Hyderabad and Chennai.

Also Read: Indigo airfare sale: Airline launches sale on 15th birthday. Check details here

The airline did take some bold bets such as starting longer routes like Delhi-Coimbatore, Bengaluru-Guwahati, Bengaluru-Lucknow. This happened when every other option on the route was a one-stop connection.

A formidable network is what makes a carrier work. It gives an airline power to price and its sales force the ability to convince the market. IndiGo mastered this strategy like no other Indian airline.

Two things worked distinctly for the airline. First was the falling standards of full-service carriers such as Kingfisher Airlines and Jet Airways.

Both fell in the trap and wanted to have a low cost arm in the form of Kingfisher Red and JetKonnect. Both failed and ended up diluting the mainline service on most sectors, if not all.

This led to thinning of the difference between FSCs and LCCs in Indian skies making IndiGo stand out for its better On-Time Performance (OTP), though with buffered block times initially, and a hassle-free service.

The innovations the airline pursued too cannot be overlooked. When FSCs were shying away from investing in technology and the likes of Air Deccan had thought of keeping technology at a distance, IndiGo was investing in newer devices and technologies like ‘Q Busters’ (faster onboarding in planes) to ensure that the congested airports in the country can still handle the traffic, which the airline was generating without impacting its famed OTP.

What didn’t

Some of IndiGo’s sheen was lost when a video of an altercation with the passenger on the ramp at Delhi became viral. While the company went into damage control mode, it was cast in an unusually negative light.

This was followed by more turbulence, that of news of disagreement between the two promoters followed by one of them going public with a website and accusations. This era also saw the exit of Aditya Ghosh as director and president.

The airline has also received blowback for sloppy services by a few celebrities in the past, including PV Sindhu, the Olympic medalist.

IndiGo 0408_002

Challenges ahead

IndiGo itself decided to rely on the famous AirAsia or Ryanair model of operating a single type of aircraft, until the airline opted to add ATR72-600 and the Airbus A321neo to its fleet. After years of convincing the market on the importance and benefits of a single fleet type - not many would have expected this deviation. But the —both its fleet and ambition—has meant that it needs to grow and for that it needs additional fleet types.

Also Read: IndiGo to launch IATA Travel Pass for international travel

As Ghosh made its exit, IndiGo started expanding positions at CXO level and most, if not all, were filled up with expats. The expanded leadership, unfortunately, is coinciding with eroding profits.

The famed sale and leaseback model too doesn't seem to work because the airline has reported losses even before pandemic and at a time when it was adding more planes than ever.

Where does IndiGo go from here? That will be the biggest story in Indian aviation.
Ameya Joshi runs the aviation analysis website Network Thoughts.
first published: Aug 4, 2021 12:22 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark