With the travel restrictions imposed worldwide in light of COVID spread, the airline business is almost in shambles. Even in this surging storm, the Indian aviation star, IndiGo has managed a smooth sail. It is fast emerging from the slump and is gearing up for pre-pandemic demand.
The company has announced its re-hiring plans already and is expected to operate with full capacity within the next three months.
The company is banking on new covid induced lifestyle trends like ‘workation’ and a new ray of hope with anti-Covid vaccine roll-out. With a steadily rising Passenger Load Factor (PLF), unit revenue, and future bookings, IndiGo has enough backings for its optimism. How does IndiGo always steer its flight out of the crisis in time?
IndiGo has the largest and uncontested domestic market share in India standing at about 55% as of October 2020. It is the only Indian airline operating with-profits continuously since 2009. What did they do differently?
IndiGo was a child of the storm. Born in tough times for the aviation sector, IndiGo adopted all the right things right from inception. In 2006, when Air India, Kingfisher, Jet Airways were the market front leaders, and the aviation sector was a tough spot to enter; IndiGo made its way. The entrepreneurial mindset of Rahul Bhatia and the technical airline experience of Rahul Gangwal gave wings to IndiGo in the toughest of times for the aviation industry. They had innovative and sturdy plans for the ambitious launch. With a new ‘Sale and Lease’ model, IndiGo acquired its first 100 aircrafts, all in a single go. Such a bulk purchase in a single go brought very discounted prices. This is where the cost optimization story began from. They have a lot of other interesting business lessons to learn from.
What did IndiGo do differently?
IndiGo heard the unsaid customer needs. When the market front leaders like Air India, Jet Airways, and Kingfisher were focusing on the full-service airline model, IndiGo came out as a low-cost carrier. It did recognize that in-flight meals and in-flight entertainment are a luxury that not many want to pay for. People opt to travel by air to save time. That is what IndiGo encashed on. It maintained high service standards like on-time arrivals, a 6 minutes dispersal rule and 30 minutes refly rule. It made sure to maintain a high air time, because that is what fetches the profits for an air-line.
IndiGo valued its biggest assets. Its aircrafts and its manpower. IndiGo bought all high power aircrafts with 12-15% fuel efficiency and a very low maintenance cost. The other asset of the airline, its crew was also carefully hired and carefully taken care of with on-time salaries.
Standardization is another key lesson to learn from IndiGo. With a standardized fleet of Airbus A320, the airline could maintain a standard SOP, and ensure easy job rotation. Training all its crew together and using it efficiently is what they achieved with a standard fleet.
Not just optimization of resources, but optimization of cost is very essential for a low-cost airline carrier. It never gave any complimentary meals, in-flight entertainment, or fancy lounge service.
When Kingfisher was embarking on a ‘fast and furious’ expansion, it fell on its face. IndiGo took its lesson and embarked on the approach of ‘expand within your risk appetite’. It operates only on profit-making routes. It had laid-off 10% of its staff in tough times of COVID restrictions. When the demand is back, it assessed it beforehand and is on a re-hiring mission again.
This is what made IndiGo airline the star carrier of Indian aviation industry.