Successful strategies employed by Indigo

Connecting the Dots

Group O1

2006: Commenced operations under InterGlobe Enterprises Pvt. Ltd.

33 domestic destinations with close to 399 daily flights

Sept-2011: Commenced international operations; viz..Delhi / Mumbai to Muscat, Kathmandu, Dubai, Singapore and Bangkok

2012: Contemplating starting regional operations

Timeline

2002-03: Moderate competition with two players2006-07: Intensified competition with entry of low-

cost carriers (LCCs); 9 playersHigher fuel prices and manpower costs eroded

profitability2007-08: Industry losses of Rs.49 billion;

deterioration of capital structure and liquidity crunchConsolidation phase (Air India+Indian; Jet+Sahara;

Kingfisher+Air Deccan)Growing market share of LCCsIncreased capacity utilisation aided efficient players

post profits in 2010-11

State of the Industry

Source: CRISILResearch

Profitable even in the bad years of 2008-2010Net profit estimate of Rs.600 crore on revenues of

Rs.3500 crore in 2010-11Grown at a steady clip – addition of eight planes

every yearMarket leader – 23.3% market share in 2011-12Successful foray into the international markets

Better Performance….which parameters?

One service – one fleet (63 Airbus A320s)Higher fuel efficiencyAlliance with Airbus for maintenanceAsset light leasing model IndiGo has 96 employees per aircraft; lean-and-

mean vis-à-vis to Air India's 250 a planeOnly Indian airline to adopt RNP approach: Fuel

and cost savings; Faster turnaround at airportsGradual expansion Lower flight to market ratioCompetitors have only been low fare and not low

cost

Cutting Costs

Cheap tickets

Great on-time performance

Clean and fresh airline service – a differentiator

Making simple promises and KEEPING them too

Trusted brand - high quality at lower fares

Differentiating Service

Overall Low Cost

Broad Differentiatio

n

Focused Low Cost

Focused Differentiatio

n

Best Cost Provider

Meticulous planning

• Route selection

• For international foray - the network planning, marketing,

training and product definition began even before

completion of 5 years

• Appropriate flight timings – strict check-in times of hotels

in Singapore and Bangkok

• Domestic strategy extended

Backbone

Motivated workforce

• Among top 50 best work places in India

• Lowest attrition in the industry

• Face of the company in advertisements

• Employees working in multiple roles

Backbone….contd

Financial prudence

• Low dependence on debt

• Asset light leasing model

Effective communication

Backbone….contd

Competitive Advantage

Resources Valuable RareCostly to Imitate

Exploited by the

OrganisationAircraft Y N N YHR Y Y N Y

Fuel Y N N YBrand Equity Y Y N YOperations Y Y Y Y

Domestic competition set to intensify with FDI nod (AirAsia – Tata JV)

High competition in the international sector – AirAsia, Air Arabia, and Air India Express

Poaching of employees Availability of pilots and skilled personnelPoint-to-point carrierExtensive government interferenceATF fuel prices

Risks

Indian market still under-tapped

Going regional - smaller cities

Extension of the current strategy

Opportunities

Going strong and interesting times ahead…..

Thank you….Group O1