Indigo airlines Harvard Case Solution & Analysis

Indigo airlines Case Study Solution

Abstract

The following analysis have shown the internal analysis of company named as Indigo airlines, which is being operated in India. Since its inception, company is performing outstanding. Moreover, the strategies that have been played by the company are very cost effective and therefore, Indigo is earning the highest profit in the industry.

The internal analysis is done by using the SWOT analysis frame work. Through this framework, company would be able to analyze all of its strengths, weaknesses, opportunities and threats that are associated with the company and in industry. Financial analysis is also done in the report in order to analyze the current financial standard of the company as well as in the future.

In the end, some recommendations have been generated to suggest the management of the company to do appropriate steps in order to expand itself internationally, by using cost effective strategies and maintaining its competitive advantages.

Introduction

Indigo was developed in 2006, as a merger of two companies named Inter-globe company and investor, Rakesh Gangwal. The company believed on three main ideas. These ideas were the low airfare charges, best and professional customer service to be provided, single class configuration aircraft and to be honest when dealing with delays and cancellation of flights or other services. As a result, company’s market share reached to 27.9%, being the market leader of the aviation industry and facilitating 91% of on-time performance.

The business practice followed by Indigo was LCC that is Low Cost Carrier. However, in other countries, LCC flights were operated through secondary airports and conduct different operations than FSAs (Full Service Airlines). However, as India is an under developedcountry, many facilities to LCC were not being provided. Consequently, indigo has to face many disadvantages that includes, unavailability of secondary airport which resulted in increasing cost such as parking fees and taxes for the infrastructure being used by the company.

Many strategies have been played by Indigo Management in order to decrease its cost, increase its efficiency and growth. These strategies included, Indigo did not purchasedaircrafts,however it borrows aircrafts on contractual basis. As a result, the cost of purchasing is minimized. Moreover, the aircrafts are changed in every 3-4 years. In addition, to decrease the cost of aircraft management and maintenance, the company had made contracts with Airbus to maintain air crafts immediately, if any fault arises. Also, the company used Airbus Air crafts as they are higher fuel saver than Boeing’s air crafts, which is up to 3%. The company had purchased another equipment that helps the aircraft to save fuel cost up to 15% or 400,000 gallons per annum.

For the growth and expansion, unlike other airlines, company purchased one aircraft rather than many. However, as per the growth, company purchased more crafts whenever needed or required. Moreover, the company implemented RNP required Navigation Performance, which is used for fuel efficiency. There were many extra benefits in order to implement RNP, such as flight path is shortened which saves up to 106 barrel fuels as well as reduce greenhouse emissions. This helped the company to have faster turnaround time of flights. Consequently, air crafts are able to fly for minimum twelve hours. However, when compared, an average airplane can fly up to 10 hours a day.

To reduce the company’s operating costs, the company planned to keep lower cutlery and food items for customer servicing. In addition, company had used hub and spoke model to its air crafts. This model indicates that there are very few flights which do not interconnect. Therefore, a hub is developed where connecting lights are meant. However, it has been stated that Indigo airlines was the first which used Hub and Spoke Model.

Apart from food, many other requirements of customers are fulfilled in indigo airlines which attract them. Therefore, the Indigo Airlines are meant to be the best customer service providing airline, as there are very rare flight delays and cancellations.

All strategies that have been applied requires employee’s retention and low churn rate. However, the human resource manager has always been praised in order to manage employees very efficiently who have played an important role in the success of Indigo airline.

Indigo airline wants to expand its business by introducing international airlines. However, the business model of both lines are very different. Therefore, indigo have to analyze whether they can enter in the international business while being profitable and successful.

Indigo airlines Harvard Case Solution & Analysis

 

Problem statement

The problem that have been identified in the company is that Indigo airline is changing its cost structure from low costto hybrid cost. Moreover, the company wants to expand itself by introducing international flights along with domestic flights. However, company is confused if that would be able to maintain their competitive advantage along with all the cost effective and high earning strategies....................

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