Transcript
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INDIGO-STRATEGYPRESENTATIONRoll no-01,04,14,36
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Introduction to the airline Industry
and Indigo airlines
India is one of the fastest growing aviation
industries in the world.
The growth in the aviation industry looked
promising and hence attracted many low costcarriers like SpiceJet, GoAir and IndiGo.
IndiGo is the latest entrant as a low cost
carrier in the aviation industry of India. IndiGo serves approximately 33 cities with a
fleet of approximately 65 A320s.
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SWOT Analysis
STRENGTHS WEAKNESS
1) Backing from promoters 1) scope for differentiationis low
2)Brand awareness 2) services can be quickly imitated3)Safety record 3)Quickly changing business
conditions
4)Well trained staff
OPPORTUNITIES THREATS1)Increasing middle class 1)Fuel price surge
2)Cargo market 2)Government interventions
3)Increase in taxes
4)Economic downturn
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PESTLE Analysis
Political/Legal factors 49% FDI in domestic airline sector
Lack of government initiatives stalling the growth
Slow growth of airport infrastructure because of
government impasse Economic factors Business cycles impact airline industry( treated as
luxury during economic downturn)
High fuel prices and surging taxes
Depreciating value of the rupee( leases, expatpayments in USD)
Industry operates under High Cost of Capital.
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PESTLE Analysis..
Social factors Changing travelling habits
Raising income levels in tier 2 and tier 3 cities
Small things like serving right food matters in a socially
sensitive country like India. Technological factors
Growth of e-commerce and based ticketing solutions
Helped in reducing check in times
Adding value to customers and airline using NDS(New
Distribution Capability) Environmental factors
Noise
Low air quality
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PORTERS 5 FORCES
Threat to new entrants Very high initial capital requirements
Stiff competition from existing players
Product/Service differentiation is low
High barriers to exit
Bargaining power of suppliers High bargaining power
Number of suppliers are very few and hence highbargaining power.
There are only four suppliers for ATF (Aviation TurbineFuel); IOC, Hindustan Petroleum Corporation, BharatPetroleum and ONGC.
Due to shortage of commercial aircraft pilots in India thesupply of pilots is concentrated, hence increasing their
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PORTERS 5 FORCES..
Bargaining power of buyers Large number of buyers and highly fragmented lowering
their power
Low switching costs
Competitive rivalry Differentiating strategy fails due to more or less
homogeneous service.
Suppliers of aircraft are the same- Boeing or Airbus.
Switching costs are low for low cost airlines and hence low
brand loyalty. Availability of substitutes
Air travel is preferred to save time and for convenience andhence no direct substitute
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Key Success Factors
People
Products and Services
Route System
Revenue/Cost Control
Financial Management
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n erna na ys sResources &
CapabilitiesTangible Resources
PhysicalResources
Human Resources
Technology
Resource Financial Resource
IntangibleResources
Reputation Social capital
Brand Awareness
EmployeeRelationship
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Internal Analysis - Low Cost
Leadership
Financial Health
High Cash Flow
Fourth Indian low cost
carrier to operateoverseas
Profitable airlinecompany in India -Order of 180 newaircrafts A-320 USD15 Billion
Low-Fare Flight
Best low cost airline ofIndia & Central Asia
Scored a hatrick atSKYTRAX World
Airline Awards 2012
CostEffectiveness
Operating onsecondary airport
E-ticketing Fewer employees per
aircraft
More seats per aircraft
Selling and leasingback plane
On-time flights
Always on time andoften before time
Low TurnaroundTime
Turnaround time forIndigo is less than30 minutes
No complimentary
meals
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Value Chain
INBOUND
LOGISTICS
OPERATIONS OUTBOUND
LOGISTICS
MARKETING
AND SALES
SERVICE
PROCUREMENT
TECHNOLOGY
DEVELOPMENT
HUMAN
RESOURCE
MANAGEMENT
FIRMINFRASTRUCTURE
Adapted with the permission of Michael E. Porter from Competitive Advantage: Creating and Sustaining Superior
Performance, copyright 1985 by Michael E. Porter.
- Financial Policy - Accounting- Regulatory Compliance- Legal - Community Affairs
Pilot Training
Safety Training
Agent
Training
In-flight
Training
Baggage Tracking
System
Promotion
Advertising
Advantage
Program
Travel AgentPrograms
Group Sales
Ticket
Counter
Operations
Gate
Operations
AircraftOperations
On-board
Service
Baggage
Handling
Ticket Offices
Route Selection
Passenger Service
System
Yield Management
System (Pricing)
FuelFlight Scheduling
Crew Scheduling
Facilities Planning
Aircraft Acquisition
Information Technology Communications
Product
Development
Market Research
Lost
Baggage
Service
Complaint
Follow-up
Baggage
System
Flight
Connections
Rental Car
and HotelReservation
System
Computer Reservation System, In - flight System
Flight Scheduling System, Yield Management System
Baggage Handling
Training
Flight, route and
yield analyst
training
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Competitive Strategies
1. Air craft management
Indigo purchased the aircrafts, then sold them
to intermediary and then hire the fleet on lease
from then on contractual basis.
Use single configuration aircraft.
For maintenance, it allied with airbus
Indigo preferred airbus over boeing as the fuelefficiency of the former is greater than the
latter.
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2. Growth and Expansion
strategy It adopted a strategy with one aircraft and adding one after six
week. In other way is that they first tested one market and afterestablishing foothold in that market, they expanded to othermarkets.
Shorter trajectory for landing.
Does not require ground based navigation Helps in reduction of green house gas emission.
Turnaround time is less
Low frills
Hub and spoke models for flights
IndiGo preferred to wait and have a solid business plan in place. Itsplan was to stick to operating a single configuration aircraft,providing point-to-point connectivity.
IndiGo, however, continued its gradual expansion and waited forfive years to launch its international operations, although, arguably,the airline had to wait those five years because of airline industry
regulations. Still, it wasn't tempted to find loopholes to expand aggressively in
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Tetra Threats
Added
Value
Appropriated
Value
Threat of Imitation
Imitation of business
model
Economies of Scale
Imitation of aircrafts
Human Resource
imitation-Cat 3 compliant
pilots
Cost Leadership rises
threat of retaliation
High Imitation Lag
High power of aircraft
suppliers- Boeing andAirbus
Limited number of
suppliers for ATF
Government Interference
High power of supplier of
pilots due to shortage of
pilots
Railways
Technological
Advancement
Premium Airlines like Air
India, Jet Airways
Either of the LCC like
Spicejet, GoAir
TrainingStrikes
Benchmarking
Sustaining cost leadership
by maintaining economies
of scale and resources
Payment System-
incentives
Threat of SlackThreat of Hold Up
Threat of Substitution
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Market Share and competitors
share
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Bibliography
www.centreforaviation.com
www.goindigo.in
www.livemint.com
www.economictimes.indiatimes.com
http://www.centreforaviation.com/http://www.goindigo.in/http://www.livemint.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.economictimes.indiatimes.com/http://www.livemint.com/http://www.goindigo.in/http://www.centreforaviation.com/7/27/2019 INDIGO-Strategy Presentation Updated
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THANK YOU
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