India is a hard place for airlines to make moneyBUT

One player seems to have found the magic formula.

Management of IndiGo Airlines

Gautam GuptaHansraj College

ContentsIntroductionCompany ProfileSWOT AnalysisFunctions of Management

PlanningOrganizingStaffingDirectingControlling

Masterstroke

IntroductionIndiGo is a low-cost airline headquartered at Gurgaon, India.The airline was founded as a private company by Rahul Bhatia and Rakesh Gangwal in 2006.Since 2012, its the largest airline in India in terms of passengers carried, having a current market share 36.8%.The airline operates 818 daily flights to 41 destinations and is the second largest low-cost carrier in Asia.It has its primary hub at Indira Gandhi International Airport, Delhi.The company went public in November 2015.

Parent Company InterGlobe Enterprises

Category Indian domestic sector

Tagline Go IndiGo

USP On Time Performance, Lowest Price

Segment Cost Conscious Passengers

Target Group Lower Middle Class / Middle Class

Positioning Low Cost, No Frills

Company Profile

• Strong Promoters• Largest Low Cost

Carrier (LCC) in India

• Only airlines to make consistent profits

• Good advertising and marketing strategies

• Low operating routes

• Not globally established

• IndiGo is not exploring the untapped domestic air cargo market

• Opening up of International routes

• Untapped cities• Increasing flight

frequency

• Plenty of new competitors

• Rising Labour and Fuel costs

• Unfavorable govt policies

Strengths Weaknesses

OpportunitiesThreats

SWOT

Functions ofManagement

PlanningOrganizingStaffingDirectingControlling

PlanningIn IndiGo, before launch of new products or introduction of new schemes, market survey is done.IndiGo has developed a strategic plan which guides the long-term operations of the firm. Strategy has been adopted to minimize operational costs and at the same time ensure that quality is maintained. Management plans the activities of the organization as they have to take account of what is necessary with the appropriate prevailing conditions.The company’s marketing strategy is based on customer experience and quality of the service in order to improve its image.

Flight Cancellation

s Ratio

OrganizingAll activities are divided into task groups with professionals and experts.IndiGo coordinates operations in all its units across the world to ensure that there is a smooth running.Most of the purchasing activities are done centrally so as to minimize the costs and ensure uniformity.This structure coordinates and motivates employees so that they work together to achieve goals.

StaffingBETTER STAFFING LEADS TO HAPPIER PEOPLE. IndiGo hires highly qualified and talented employees that add value to the company. IndiGo's executives, including staff at the check-in counters, air crew, sales and marketing staff are hired only after Rahul Bhatia meets each of them individually.The company has a team of very competent employees that are hired through a competitive process. Rahul Bhatia, Founder, IndiGo

DirectingIn comparison to competitors, the workers are provided with healthy working conditions, incentives and motivation.Teamwork is encouraged across all hierarchical levels and all members of staff are given an opportunity to participate in decision-making.Creativity and innovation is highly encouraged among the employees in order to give the firm a continuous competitive advantage.IndiGo enjoys a good relationship with other external stakeholders such as various governments, shareholders, and the local community.

ControllingIn IndiGo, the increasing profits shows that in the organization activities are performed as per the plans, also the organizations resources are being used effectively and efficiently.IndiGo closely monitors its operations and evaluates its performance against organizational targets.Auditing is normally carried out on a regular basis to ensure that the organization is moving in the right direction.Any deviation from the set standards is adjusted through appropriate corrective measures.

Profits

Market Share

Buy only one aircraft model, but order in bulk

• By purchasing many planes at once, IndiGo is able to negotiate great deals. In addition, buying only one model of aircraft means that pilots and crew needs to be certified for one aircraft only, resulting is in greater flexibility by making use of the same crew thereby cutting hiring, training and upgradation costs.

Quality : Key to good service

• IndiGo's executives are hired only after Bhatia meets them individually. IndiGo boasts of a turnaround time (time taken for a plane to be ready for the next flight) of less than 30 minutes. Less time on the ground means more time in air, reducing fuel burning. IndiGo's aircraft spend an average of 11.4 hours a day in sky, compared to the industry average of 9.5 hours.

Masterstroke

Masterstroke

Lease the planes

• Immediately after IndiGo takes delivery of an aircraft from Airbus, it sells the plane to an aircraft lessor, and then leases the plane back. At the end of the lease, IndiGo returns the aircraft to the lessor. Other airlines uses "leasebacks" for portions of their fleets, but none to the extent of IndiGo. This act of financial engineering allows the airline to keep its cash flow high, and its debt low.

Put an expiration date on aircraft

• Another benefit of IndiGo's lease strategy is that it allows the company to keep its fleet extremely young. The company's leases typically range from just three to six years before the aircraft is returned. According to the company's prospectus, the average age of IndiGo's aircraft is 3.26 years. That's one of the youngest fleets anywhere in the world. Newer planes are typically more fuel efficient and require less maintenance, which cuts down on operating costs.

A dedicated airlines with no frills

• IndiGo freely admits the offerings are “no frills”. Having only Economy class means that Indigo does not have to spend time and money on privilege passengers. They also don't maintain any expensive lounges at airports or offer free food and beverages for passengers, further reducing costs. 

It's all about customer focus

• IndiGo's success model relies on consistent low fares, on-time performance and least flight cancellations. However, the airline's biggest edge over others is its emphasis on customer focus. Fliers want on time journey. Other airlines advertise low fares or other promotional offers, IndiGo only focuses to on-time performance.

Masterstroke