Published on December 13, 2016
1. AIRLINES COST REDUCTION STRATERGIES Assigned by : Nikita Ma’am Presented By : Diljit Singh Khalsa Ronak Gosai Avni Patel Rajan Amin Presentation on :
2. General Overview Founded : 2006 Commencement of Operations : 8 April 2006 Type: LCC (Low Cost Carrier) Hubs : Indira Gandhi International Airport (Delhi) Fleet Size : 101 Destinations : 39 Parent Company : InterGlobe Enterprise Net Income : INR 1,304 Crores (FY 2014-15)
3. WHY ? In Jan 2013, IndiGo was the second fastest growing low cost carrier in Asia. In August 2103, the Centre for Asia Pacific Aviation ranked IndiGo among the 10 biggest low cost carriers in the world. Largest airline in India in terms of market share of 36.5% as of September 2015. Order of 250 Airbus A320neo in August 2015 is the single biggest order by an airplane from India worth approximately $27 billion. IndiGo is only 1 of two airlines in India who declared profits in FY 2014-15 in the struggling Indian market.
4. Strategy 1 : SINGLE TYPE OF AIRCRAFT IndiGo operates only Airbus’s A320 family of aircrafts in its fleet. (Air India 10, Jet Airways 9, Spice Jet 3) A320 are one of the most fuel efficient planes today. Benefits: Greater flexibility. Low hiring cost. Low training cost. Streamline MRO process. Low up gradation cost.
5. Strategy 2 : NO FRILLS IndiGo offers only Economy class with no in-flight entertainment or complementary meals. Benefits: Only economy class means more customer per flight. No frills saves cost. Do not have to spend time, money or crew on privilege customer. No need to maintain expensive lounges at airports.
6. Strategy 3 : LOW AVERAGE FLEET AGE IndiGo’s average fleet age is approximately 4 years. Most airlines have an average of 10-15 years or more. IndiGo buy planes or lease planes for 5-6 years of duty and then return them or lease them forward. Benefits: Planes are more fuel efficient when young. Operating this way helps them avoid D-Check. D-Check is done compulsorily after 8 years of operation of a plane. A D-Check may take up to 2 months during which the aircraft remains out of service.
7. Strategy 4 : BULK BUYING & LEASING Experts believe that this type of operation alone adds $4 - $5 million per plane.