The rise of Indigo

Indigo is india’s biggest profitable airline with roughly 40 percent market share . The airline has risen in last 10 years. It has got 135 modern and new aircrafts. The story of indigo is all the more exciting as the established airlines like air india, jet airways and kingfisher have made huge losses during last 10 years. Kingfisher has gone for bankruptcy and is closed down Air India has debt burden of 50000 crores. And the government is planning to privatise it. Jet airways could be saved because of timely investment by Ethihad. What has gone right for the indigo? Obviously many things. That’s why it has gained strength in a very difficult market. The key word here is business model innovation and coherent strategy where each part of the action is linked to the other to create unique positioning in the customer’s mind.

Indigo is low cost airline. For any low cost airline to survive , it has to bring down the cost operations to the minimum without affecting the quality and as well safety of passengers. Indigo bought single type of aircraft that was A 320 . The single type of aircraft brought down the cost of maintenance as well training to the staff members. The turn around time for one flight to another is also minimum. The company and its staff members reap the benefits of experience curve economy. As you gain experience doing same same things over and over again, your productivity and efficiency increase. The idea is to keep the aircraft flying for maximum number of hours to gain more revenue

Indigo gave bulk order to the Airbus industries and got maximum possible discount. That brought the the most essential fixed cost of buying aircrafts. The aircrafts are owned by the subsidiary company of the indigo which has leased the aircraft to indigo . While giving rent to its subsidiary, the cost of buying plane does not show up on its accounts. This is business model innovation which has made the airline profitable after first two years of its operations.

Indigo work force is young and aggressive. It has been able to ensure that flights are on schedule. Flights getting delayed have been very common in India By improving processes, it has been able to get almost 98 percent of flights on time. Punctuality has been the biggest driving factor for the growth of the airline. There many small process innovations which have made indigo such a powerful airline.

The airline spends good amount of time and money on training of the staff. That shows up in the operations. The rise of indigo has proved that if companies can get their acts rights and innovative , they can manage the tough external environment too.

In my workshops with executives on innovation , I try to emphasise that innovation should not be misunderstood with new product launch and research and development, it has got far wider meaning of doing new things, improving processes, doing business model innovations and looking at the innovative pricing to crate unique positioning of the company’s product in the minds of customer. The rise of indigo reinforces this view .