Indigo competitive analysis

Competitive analysis of Indigo Airlines

Indigo Airlines Highlights Leading Low Cost Carrier in India Founded in 2006 First flight Delhi-Guwahati-Imphal 4th August

2006 Presently 26 destinations in India, 259

flights everyday A fleet of 43 A320 in service ( August 2011) 238 A320 on order, expected a total of 100

A320 by 2015

The Big Picture of Competitive Analysis

Industry Competition

Industry Competitors in Domestic Market

Indigo29%

SpiceJet21%

jetLite11%

Kingfisher29%

Go Air9%

Market Share In LCC segment

IndigoSpiceJetjetLiteKingfisherGo Air

Jetlite Indigo Kingfisher SpiceJet

Fleet Size 25 25 66 20

Personnel 1542 2320 7695 2458

Passenger Load Factor 74.9 80.0 72.7 76.6

Comparison of Assets and Load Factor ( March‘10)

Airlines Delhi-Mumbai Mumbai- Blore Imphal- Guwahati

Indigo 3185 2428 1979SpiceJet 3184 2431 NA

KF Red 3834 2880 2353

Jetlite 3034 2284 2130

Comparison of Fares (Two weeks advance booking)

Fees and surcharges forms the major component in prices Highly Competitive Prices with very narrow variation No distinguishing service like Seat preference, meal or any

other VAS which could set Indigo apart

Airline On Time Performance

Indigo 84%

SpiceJet 84%

JetLite 54%

Kingfisher 70%

On-Time performanceContinuous High performance by Indigo Airlines could be a distinguishing factorBrand building based on this factor

Competitor include home grown carrier like SpiceJet, Kingfisher and international LCC like AirAsia, Air Arabia , Fly Dubai

International Operations started from 1 Sept 2011

34% route authority in domestic market not utilized indicates strong competition in domestic segment and higher profit margins in international routes

Key target market include SE Asia and West Asia flying out from tier II cities like Trichy , Coimbatore, Amritsar, Khozikode

Competitive advantages to international carriers due to govt policies ( entrance) and fuel supply chain

Competition in International Market

The Big Picture of Competitive Analysis

Industry CompetitionPotential threat

Full fledged carriers with low cost subsidiaries ◦ JetConnect, AllianceAir ◦ Sharing personnel, cost and other resources◦ Better utilization of resources

Govt policy to promote regional airlines to promote connectivity in the region◦ Freedom Aviation Private Ltd to start from 2011 in South

India

Threat within Aviation Industry

Indian RailwaysSubsidized fuel and electricity

Current effort to increase speed to 160-200 km/h◦ Upgrade locomotives and coaches◦ Introduction of more non stop trains like Duranto

and Shatabdi ◦ Improvement on existing conventional lines for up

to 200 km/h Future effort

◦ Feasibility study of high speed train in progress ( 350Km/hr)

◦ Long term vision 2020, No concrete steps taken yet

Threats from Railways

Several expressways are under construction or different stages of development

◦ Mumbai Pune Expressway◦ Chennai- Blore Expressway◦ Mumbai Vadodra Expressway and Ahmedabad-

Vadodra ExpresswayFuel prices are subsidized

Threat from Roadways

The Big Picture of Competitive Analysis

Industry Competition BuyersPotential threat

Travel Portal Web Traffic

Make My Trip 28.80%

Yatra 23.05%

Clear trip 15.75%

Major crunch of booking is coming through travel portal.

2/3rd of online ticket are booked by top 3 travel portal.

Bargaining power.

Market Share of Travel Portals

The Big Picture of Competitive Analysis

Industry Competition BuyersPotential threat

Substitutes

Over short distances railways and roadways are also an option for consumers

Advantages• Cheaper• Take almost same time

Threat from substitutes:-Domestic Markets

Routes Roadways Railways Indigo

Cost Time (hrs) Cost Time

(hrs) Cost Time (hrs)

Delhi-Lucknow Rs 750 9.5 Rs 918 7.3 Rs 1450 1.25Chennai-B’lore Rs 650 6 Rs 560 5 Rs 1284 1 ONLY FLIGHT

TIMES MENTIONED

North East India Monopoly of LCC in land locked areas

International Sector No substitutes other than air routes

Inefficient substitutes

The Big Picture of Competitive Analysis

Industry Competition

Supplier

BuyersPotential threat

Substitutes

Suppliers Airport Infrastructure

◦ Airport Building◦ Security(CISF)◦ Baggage Conveyor system◦ Common X-ray machines◦ Aerobridges◦ Airport Fuelling Facilities(Recently e.g. DAFFFPL)

Airport Infrastructure players◦ AAI◦ Public Private Partnership◦ Private

Monopoly in both AAI/Private players Prices and Airport taxes regulated by AAI and Ministry

of civil aviation …Continued

…Suppliers Continued Air Traffic Controller

◦ Airport Authority of India Ltd.◦ Altitude Assignment (higher the altitude better

the efficiency)

Aircraft Engineering Crew◦ Inter Globe Aviation(Indigo’s parent company)◦ British Airlines Engineering◦ Air France Engineering◦ Indian Airlines Engineering

…Suppliers Continued Air Turbine Fuel Suppliers

◦ PSUs: IOCL, BPCL, HPCL◦ Private: Reliance, Essar, NOCL, Mangalore

Refinery Largely Monopoly by PSUs Cost-plus pricing policy

◦ Import parity pricing model◦ State Taxes plays an important role

New Airports following a AFFPL model◦ AFFPL: Airport Fuelling Facility Private Ltd.◦ Private players are allowed to push there products◦ Available only at Delhi, Hyderabad, Bangaluru

The Big Picture of Competitive Analysis

Industry Competition

Supplier

BuyersPotential threat

Substitutes

References http://indiaaviation.aero/news/airline/1793/59/

Airports-allowed-to-decide-on-ATF-suppliers www.DGCA.nic.in Hindu.com Yatra.com Flightstat.com

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