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MARKETING MANAGEMENT PROJECT REPORT Topic on: IndiGo Airlines By, Pathange S MadhuKiran, [M19-085],Sec- A, Institute for Financial Management and Research.

IndiGo Airlines

TABLE OF CONTENTS Serial Number 1.

Particulars Introduction

2.

History of IndiGo

3.

Timeline of IndiGo

4.

Product Lines

5.

Top management

6.

Current share price and Market share

7.

4 P’s of marketing

8.

Pest analysis

9.

Branding

10.

Unique selling proposition

11.

Points of differentiation

12.

Points of parity

13.

State of demand

14.

Core competencies

15.

Target segmentation positioning

16.

Defense strategy

17.

Competition

18.

Social media preference

19.

Brand value and Brand equity

20.

Porters five forces model

21.

SWOT analysis

2

IndiGo Airlines

INTRODUCTION Indigo has India’s largest passenger airline with a market share of 41.3% as of June 2018.Their USP is being on-time, low cost and providing a value-for-money hassle-free experience. Started in 2006 by Rahul Bhatia of Inter-Globe Enterprises. The company based headquartered at Gurgaon, Haryana, India operates to 52 destinations both domestic and international. It is primarily based at Indira Gandhi International Airport, Delhi. They currently have a fleet of 175 aircraft including 41 new generation A320 NEOs and 10 ATRs.

HISTORY OF INDIGO AIRLINES YEAR

EVENT

2006

Founded as a private company by Rahul Bhatia of Interglobe Enterprises and a US based NRI named Rakesh Gangwal. Also, in that year, Indigo got the delivery of its first Airbus aircraft which they ordered back in 2015

2010

Indigo replaced Air India as the third largest Airline in India ranking just behind Kingfisher and Jet Airways. The passenger market share was close to 17.3%

2011

Indigo made a mammoth deal of US$ 15 billion by placing an order of 180 Airbus A320 aircraft. They got the permission for launching international flights in September 2011 soon after completing 5 years in the airlines business

2012

Indigo got the delivery of its 50 Aircraft in a record time of less than 6 years since it began operations. With this, it also became the second largest airline in India in terms of passenger market share and also the most profitable airline in India surpassing Jet Airways

2013 2014

Indigo became the 2 fastest growing lost cost carrier in Asia. Also, in the same year, Indigo planned to introduce lost cost regional flights

th

nd

3

IndiGo Airlines

2015

Indigo again placed an order of 250 Airbus A320 neo aircraft worth $27 billion which marked the largest single order ever in the history of airline business

2016

Indigo became the largest airline in India in terms of passenger carrying and holding a market share of 42.6%

TIMELINE OF INDIGO AIRLINES

PRODUCT LINES 1. IndiGo Airlines 2. IndiGo CarGo

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IndiGo Airlines

TOP MANAGEMENT (CEO/CHAIRMAN) NAME

DESIGNATION Director & Interim CEO CFO COO Chief Aircraft Acquisition & Financing Officer Senior VP: Flight Operation

CURRENT SHARE PRICE

The current share price:1054.10 INR.

MARKET SHARE   

40.9% for indigo in May’2018. 13.7% for JET Airways. 12.8% for Air India. 5

Rahul Bhatia Rohit Philip Wolfgang Prock-Schauer Riyaz Haider Peer Mohamed Ashim Mitra

IndiGo Airlines

   

12.3% for SpiceJet. Rest 20.3% for Other Airline companies like Vistara, AirAsia etc. 4th largest LCC (Low Cost Carrier) globally. Load Factor of 91%.

4 P’S OF MARKETING Product: Indigo Airlines is one of the largest airline brands in India providing low cost airlines transport services which is efficient and economic friendly. This economic viable price is a core product of their marketing mix which gives indigo its edge over others. Along with transportation services they also provide supplementary services like web check in, food on board etc. They provide a variety of on flight meal options. They also provide online booking, mobile ticketing and pick and drop services for consumers convenience and comfort. Indigo’s Cargo services named Cargo provides cargo services and courier services.

Price: Air transportation sector is a very competitive market sector. When consumers compare prices, they find that Indigo Airlines provides them with low fares and quality, on time services which is being mainly managed by its cost management department. Indigo makes optimal use of technology to determine the petrol needed to travel from one place to another. Aviation turbine fuel prices constitutes about 40% of the operating cost of an airline. Indigo Airlines saves huge cost on this very expensive resource. It provides optional services of meals which are prepaid. The consumers have to buy their meals in case they want to have anything on board. With these little knacks it controls its cost.

Place: Indigo Airlines currently has its operations in more than 40 countries worldwide which is ever expanding. They touch each corner of the country from north – south – east – west. It also covers 6 international destinations which includes Dubai, Singapore, Muscat, Kathmandu, and Bangkok. Indigo Airlines operates a fleet of 126 Airbus, 320 aircraft and since March 2016 it is adding one Airbus320NEO every month. Currently indigo has 15 Airbus320 NEOs which promises to burn lesser fuel which will reduce Indigo’s operating cost.

Promotion: Indigo Airlines comes up with very innovative and catchy advertisements positioning their brand very well. Indigo Airlines does a lot of promotions through billboards, hoardings, on screen and online commercials. The aim of the promotions is to increase the consumer base and to also rope in new customers.

Physical Evidence: Its corporate office is based in Gurgaon. Plus it has fulfilment centres for customers to book and pay for their tickets. It also has airport counters where people can book the tickets and enquire

Process: Ticket booking process involves different methods such as online booking through website, mobile app or on a call with indigo customer care.

People: There are different departments in indigo for people to work such as engineering department which is responsible for operations and quality assurance. The ground operations are managed by Airport operations and customer service department. Through all this, they ensure smooth operations of flight.

IndiGo Airlines

PEST ANALYSIS 1. Political: • Airline industry is a highly regulated political environment where passengers are valued over airlines. It is due to that passenger safety is at most and political establishment have been strict towards regulation for their operation due to their monopolistic behaviour. Recently the Central government has allowed 100% FDI in aviation sector which means many foreign companies will be attracted towards India and will be looking to increase their exposure in India.

2. Economic: • Attacks left a major impact on the airline industry that industry is yet to recover from. • And recession, fluctuation in crude oil price are other factor that are affection the growth of airline industry. • And also affect like competition from low-cost airliners, labour demand and other operating and maintenance costs. 

UDAN (Ude Desh Ka Aam Nagrik) by the Central Government may help the passengers to travel to unconnected cities and may help the market to grow.

3. Social: • Change in the consumer class has resulted in major changes in terms of service where consumers have been much more demanding. • Meeting the demands airlines have to stabilize their cost. • Also, the mind-set of people is also changed after the improved communication facilities have reduce the business class people to fly for meeting.

4. Technological: • Latest technology must be adapted by airlines in order to survive in competitive market. • With the help of new technology aircrafts will have lower fuel consumption and also the cost of airline operation and improve efficiency will help in growth.

BRANDING     

Pitches itself as a LOW-COST carrier and talks about every time “on time” arrival. IndiGo has a 3 point corporate mantra - Low Cost, On-Time, Courteous. This mantra is frequently used in various press-releases or advertisements. IndiGo’s image building started with advertising agency Wieden+Kennedy India (W+K) who believe “Advertising is irrelevant if the customer experience isn’t great”. Customers should not feel cheap just because the tickets bought are cheap. IndiGo also became a brand which gets a lot of appreciation on social media- a place where serviceoriented brands face flak for their failures. Won several awards for being a low-cost carrier continuously for 8 years from 2007 to 2015. 7

IndiGo Airlines

UNIQUE SELLING PROPOSITION   

On time performance and that too at the lowest prices. Indigo also has low operating costs. It has a devilish zeal in keeping the costs low, thus making it the only viable airline of India.

POD – POINT OF DIFFERENTIATION    

Low fares. Regular On-time and minimal cancellation. Tie up with leading credit card companies. More frequent flights to same destination.

POP – POINT OF PARITY  

Sites or Apps used to book tickets Quality of the food, Paid food.

STATE OF DEMAND The aviation industry in India has remained the fastest growing domestic aviation market of the third consecutive time in the year 2017. Passenger volumes in India rose by 7.6% in 2017 which is much ahead of the ten-year average rate of 5.5%. Low fare airlines have helped in boosting passenger growth. Thus, the demand has been continuously increasing. However, this year IATA said that the growth is expected to be slightly lower than 2017 because of increasing airline input costs.

CORE COMPETENCIES 1. 2. 3. 4. 5.

Very Low Debt Repeat Customers Price Sensitive On-time performance Operational Efficiency

8

IndiGo Airlines

SEGMENTATION TARGET POSITIONING Segmentation Market segmentation is dividing heterogeneous customers into smaller groups for targeting accurately. Indigo follows multiple types of segmentation such as Geographic, Demographic, Volume and Benefit segmentation.

1. Geographic Segmentation Since 2006, Indigo airlines have grown from a career with a single aircraft to having a fleet of 175 aircrafts currently. Indigo is currently operating in 47 destinations in India and 9 international destinations. Indigo is currently operating in Tier 1, Tier 2 and few of the Tier 3 cities in India.

2. Demographic Segmentation Indigo airlines have mainly segmented their market on the basis of the income of people. It mainly focuses on the families which belong to lower middle and middle-class families by providing low cost services. It also provides special fares to senior citizens, armed forces personnel and students.

3. Psychographic Segmentation Indigo understood the emotions, interest, values, beliefs and lifestyle of India customer. This segmentation provides a better overall understanding of the consumer, which eventually helps the brands to execute emotional marketing to highly responsive segments.

4. Benefit Segmentation Benefit segmentation is on the basis of the benefits the customer expects from a product or service. It mainly focuses on offering the benefit of low cost air travel to the customers as air travel is generally perceived an expensive travelling option.

5. Volume Segmentation: Volume Segmentation is on the basis of quantity purchased and targeting bulk buyers and providing them with additional offers. Here, Indigo provides additional discounts and customized fares for family bookings (4-9 persons) and group bookings (7 or more). In a group booking it also provides flexibility to customers to add names up to 10 days before the journey.

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IndiGo Airlines

Targeting: The target market for Indigo is the customers who are cost conscious. These are the customers for whom the priority is to reach on time without much additional services at a fair cost.

Cost Conscious Less Addititonal

Services

On-time

Performance

Positioning: Indigo Airlines has positioned themselves as a low cost no frills airlines and on-time performance. While other airlines advertise low fares and other promotional offers on their websites, Indigo has continuously tried to position itself as on-time performer through its advertisements on television, th print and social media. Indigo has tried to maintain its “punctual” image and has been ranked 4 position with an On-Time Performance score of 81.22%. Indigo has also advertised the same to maintain the position of an on-time performer in the minds of customers.

10

IndiGo Airlines

Porter’s Generic Strategies: Indigo has become India’s fastest growing airline carrier and the largest domestic passenger airline with a market share of 42.1% as of July, 2018. The goal of Indigo Airlines is to provide with low cost air travel with high quality. The goals indicate what a business unit wants to achieve and a strategy is a game plan for getting there. Indigo follows the Overall Cost Leadership strategy to achieve its goals. Under this strategy firms try to achieve the lowest production and distribution costs so as to underprice competitors and win market share. Indigo is the most efficient low fare operator in India, Indigo believes in providing what are the basics. It has a policy of offering one class of no-frills service on a single type of plane. Indigo has chosen to stick to the world’s best-selling aircraft, the Airbus A320. This helps in reducing maintenance and repair cost. It also reduces the training cost of staff. Indigo also broke the industry standards with simple things like turnaround time. Indigo boasts of a turnaround time of less than 30 minutes. Less time on the ground means more time in the air which means reduction in fuel burning. Indigo’s aircraft spend more than 11 hours a day in the sky which is phenomenal compared to industry average of eight hours. Indigo doesn’t provide any service other than carrying the passengers from one place to another. For every additional service one needs to pay extra. This reduces its base fare. Indigo tries to bring down its cost wherever it is possible to do so. For example, whenever an Indigo aircraft flies during day time, the navigation lights located on its wings and tail tips. The reason is to save the cost of changing bulbs. It is a very minor detail most other airlines might have ignored but Indigo takes such minor details seriously which makes them different from others.

DEFENSE STRATEGIES 

The aim of defensive strategies is to reduce probability of attack, divert attacks to less threatened areas and lessen their intensity.

Position Defense: 

It means occupying the most desirable position in consumer’s mind. IndiGo has created this position in people’s mind when it comes to low-budget travel and on-time service.

11

IndiGo Airlines

COMPETITION: CLOSE COMPETITORS Indigo

Jet Airways

SpiceJet

AIR India

Air Asia

Vistara

Go airlines

Founding Year

2006

1992

1984

1932

2001

2013

2005

Type

Public

Public

Public

Govt.

Public

Private

Private

Tags

Airlines Aviation Airport Transport ation Insurance Tours

Airlines Aviation Transpo rtation

Airlines Aviation Transport ation

Travel and Leisure Airlines Aviation

Travel & Leisure Airlines Aviation

Airlines

Airlines Aviation Transport ation

Head quarters

Gurugram

Mumbai

Gurgaon

New Delhi

Sepang

New Delhi

Mumbai

Employees

18000

13265

2349

28085

6089

1000

671

Facebook followers

72k

3.18m

1.2m

44k

11m

44.9k

1.1m

Twitter Followers

155k

260k

116k

135k

3.18m

61.2k

67.3k

Leadership

Rahul Bhatia InterimCEO

Vinay Dubey CEO

Ajay Singh M.D.

Pradeep Singh Kharola M.D.

Tony Fernandes CEO

CEO Leslie Thng

CEO Cornelis Vrieswijk

Annual Revenue

380m

3.6B

1.1B

3.4B

1.1B

20m

540m

12

Aviation

Transp ortation

IndiGo Airlines

SOCIAL MEDIA PREFERENCE:

Although Indigo lacks presence on a lot of social media channels, where it has presence, it fares really well. The tone used to interact is very warm and friendly. On Twitter, they have a very fast response time of average 15 minutes.

BRAND VALUE AND BRAND EQUITY Brand Value: For a company like indigo airlines, estimating brand value for high price is easy. Brand value is something the financial value for other companies to buy our brand for certain value. But,

Brand Equity: This is unlike brand value which is hard to estimate because, a company needs to do research how consumers have the belief on our brand. Different consumers use different criteria as convenience and price to conclude their decisions. One of the best ways to know our brand equity is by doing a survey how well do people know about our brand.

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IndiGo Airlines

PORTER’S FIVE FORCES MODEL

1. Threat of New Entrants:   

Product differentiation: In low cost carriers the main difference is in service provided to the customer. Switching cost: Switching cost is low so customer can easily choose low cost carriers. The exit cost is high for an airline company. Easy entry for Foreign as well as Domestic Carriers International Routes where Indigo Operates – Singapore, Dubai, Muscat, Bangkok, and Kathmandu.

Key Barriers:  

Gov. Regulation / Indian Civil Aviation Policy. Set-up cost, fuel cost and resource availability.

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IndiGo Airlines

Regional carrier Start-up.



2. Bargaining Power of suppliers: In airlines there are generally two major suppliers of aircrafts. 1. Airbus 2. Boeing there are some other suppliers like Dornier, Bell, ATR-42 but they don’t meet the requirement to serve the low-cost commercial aircraft carriers especially like Indigo airlines. As, the supplier are few they are in better position to bargain. Airports are local monopolies with power. Powe...