1. Only debt free company in the aviation sector – It has enough cash in his kitty to sustain itself for another two years. With the amount of cash that indigo possesses it will surely be one of the big players in the low-cost space globally with its expected fleet size of about 100 planes by the year 2016. Indigo’s fleet makes up approximately 6.5% of India’s combined fleet size and comparing this figure with the market share of 27.40%.
2. Word of Mouth & Repeat Customers – Indigo has hardly advertised and indulged in brand building activities. It spends less than 1% of revenue on marketing. It is only lately that it started to realize the value of advertising and launched a couple of ads. The secret behind the immense success of the airline is the word of mouth advertising & repeat purchases by the customers. Indigo outperformed its rivals by establishing a difference; it created greater value to its customers at lower price. Hence, Delivering greater value allowed them to charge higher and Greater efficiency resulted in lower average costs.
3. Price Sensitive & Time Sensitive – The company achieves cost advantage through various processes such as avoiding the in flight services, No free meals, Highest no. of seats in the aircraft, Lower employees per aircraft, Lightest passenger seats in India which weigh only 12.8 kgs and using paint which overall weights 50 Kgs less. Indigo has broken up the job into small parcels with time targets and each of these is monitored. They have even turned around an aircraft in 14 minutes.
4. Operational Efficiency & Innovation- Indigo has set up a centralized operations control centre which monitors the weather, anticipate delays and even provides advance information to the ground staff. Average age of the fleet is about 1 year, the occurrence of technical faults are low and hence less maintenance issues. Because of this Indigo has managed to achieve high On-Time performance. Indigo keeps implementing new and innovative ideas to increase the quality of customer service. Recent example is: Indigo has roving “check-in counters” where passengers with only cabin baggage can check-in with an Indigo official with a handheld device, rather than lining up at the check-in counter.
Calculating Success of Indigo Airlines (Load Factor)
“Indigo has reported a Load Factor of 75.7% when the Industry’s average was 65.6%” * Load factor represents the proportion of airline output that is actually consumed. To calculate load factor, divide RPMs by ASMs * RPM(Revenue Passenger Miles) – It is calculated by dividing passenger revenue by available seat miles * ASM (Available Seat Miles) -One aircraft seat flown one mile, whether occupied or not. For example-An aircraft with 200 passenger seats, flown a distance of 200 miles, generates 40,000 available seat miles.