Indigo Airlines (Cost Reduction)

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Information about Indigo Airlines (Cost Reduction)

Published on December 13, 2016

Author: DiljitSinghKhalsa


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.

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