indigo airlines marketing plan
TRANSCRIPT
H4G9 – Great Lakes Institute of Management
IndiGo Airlines: Market Plan
Executive SummaryIndia’s best performing Low Cost Airline in
terms of profitEstablished in 2005 as a subsidary of
Interglobe InterprisesA fleet of 30 aircrafts making 170 flights
daily, across 22 destinations in IndiaPlans to acquire 125 new aircrafts by 2025Plans to serve 100 cities in India, South East
Asia, Middle East and China by 2025
The IndiGo Dream…
Why IndiGo ?Emergence of the Great Indian middle class
willing to spend money for swifter travelFor the Individual on the Go,who values time
and on- timlinessBudget travel is not cheap travel, Quality of
ServiceMission Statement :To be the best Airline in India by providing the following values to the customer:
- Affordable Fairs- Ontime performance- Hasslefree Service
Situation Analysis
Open Sky Policy Deregulations in different spheres Low entry barriers to attract new
companies FDI limits
49 % for airlines 100% for airports Extensive airports development
planned
Macro Environment Analysis: Political
Rising income of middle class GDP growth of more than 8% and
expected rate in two digits Average salary increase highest, 14% in
the world Tourism industry growth: 6 % in 2009
Macro Environment Analysis: Economic
Macro Environment Analysis: Technological Modernization of Airports Better handling of Aircrafts, passengers
& cargo Developing Greenfield airports with
Corporate collaboration
Rising middle class: 1993 - 1999 : 39.5 to 56.7
million households 2005: 300 million
households 2010: 400 million
households (Estimated)Leisure travel increased by 15 % in 2009Number of foreign tourists in 2009-2010:
5.1 millionStatus symbol to travel in plane. Glamour.
Macro Environment Analysis: Social & Cultural
Changed travelling pattern of consumersHighest percentage people in age group
20-25Educational environment being improvedShift towards nuclear family concept
increases travel frequencyMiddle class income above Rs.90,000 pa
(Source: NCAER)High energy cost. The cost of ATF in India
for domestic airlines is almost double than that in the international market
Macro Environment Analysis: Demographic
SWOT Analysis
Strengths• High Brand
Awarness• Cost
Leadership• High
Efficiency• Innovation• Tie Ups• Hassle Free
Weaknesses• Less
Differentiation
• Too many players
• Short lived innovations
• Untapped domestic cargo segment
Opportunities• Freight
market• Increased
Domestic Air traffic
• International Markets
• Chartered services
• Regional connectivity
• Airport upgradation
Threats• High ATF
prices• Competitors• Economic
Slowdown• Poaching• Government
policies• Scarcity of
pilots• Cost inflation
Segmentation, Target & Positioning
People for Buisness
travel
Cargo Services
Charter Airways
Leisure travel/Hol
iday
People for Buisness
travel
Leisure travel/Holiday
New Market Expansion•Kolkata, Bodhgaya, Patna, VaranasiBuddhist Circuit
•Chennai, Madurai, CoimbatoreTamil Nadu •Vijaywada, VishakhapattnamAndhra Pradesh
•Bhopal, Raipur, Indore Madhya Pradesh
•Belgaum, MangaloreKarnataka•Chandigarh, AmritsarPunjab•Port BlairAndaman
Geographic- Region, Rural and Semi-urban areas
Demographic- Income, Occupation, Education
Psychographic- Socioeconomic Classification, Lifestyle
Behavioral- Occasions, Benefits, Usage Rate
Basis for Segmentation
Socio-economic revolution is underway. Increase in income of Middle class and increase
in volume of affluent sections of society.
Additional Characteristics of Target Market
Strategic Focus and Plan
One type of airplane - brand-new Airbus A320s
One type of fare - lowOne type of customer service -
professionalOne type of route - serving destinations
within IndiaOne way to deal with delays and
cancellations – honestly
Core Competencies
Sustainable Competitive Advantage
Resources
Aircrafts
Human Resources
Brand Equity
Social Capital
Employee relationship
Fuel
Value
High
High
High
High
High
Costly to Imitate
No
No
Yes
Yes
No
No
Easy to substitut
e No
No
No
No
No
No
Be visible – go all out to project yourself as the Future Market Leader
Go Local – Connect with the Middle classFocus on your Core Competencies and
market themAim to compete with Railways in the long
run
Market Strategy
Market Research The Five Indian Flyers: Market Share (Mar 2008)
14.7%
11.9%
23%26%
17.8% IndiGo
spiceJetKingfisherJET AIRWAYSAIR INDIA
The Five Indian Flyers: Business
The Five Indian Flyers: Financials
The Indian Flyers: Customer Satisfaction
Consumer Preference
Competitive ForcesHighly Volatile Oil Prices
Multiple Market Players
Limited Price Ceiling
Threat from Potential Entrants
Highly Competitive
Prices
Market Penetration and Price DifferentiationPricing Strategy
Low Cost And High Quality of ServicePrice to be diffrentiated with respect to
days before the travel.High seating density and load factor.No frills such as ‘free’ food/drinks or
loungesTargeting segments locally based on
seasons and festivals
Components of PricingBase FareUser development Fee (based on airports)Air Fuel Surcharge (Variable on ATF Prices)Passenger Service FeeLoad Factor ( Average Seat Per Mile)Ticket booking prior to travel based on
number of days.
Price DeterminationKolkata to Bodhgaya/ Chennai to Coimbatore (425 KM):
1) Passenger Service Fee Rs 2252) Fuel Surcharge Cost
ATF Prices Rs 47843.50 / KLAverage seat capacity 180Load factor 70% (125-135 occupancy) Average mileage 2.9625 L/ km ATF cost per passenger Rs 480 Crew members 2 pilots + 4 airhostess (Rs 6.5
lakhs/100 hours) = Rs 52/ person
Capital cost Rs 2.25 Crores/ month as cost of the Plane (Maintenance + Insurance)
Assuming 1 flight per day Rs 1466 So overall the Fuel surcharge
Cost per seat Rs 480+ Rs1466+ Rs52 = Rs 2008 3) Base Fare : Minimum Base fare of Re 101 which would change based on the days booked prior to Travel
Price Differentiation of Base fare based on day of booking prior to Travel
More than 15 days prior to travel• With other
fixed, Base fare would vary 101-501
Within 14 days of Travel• The Base fare
could upto reach upto 1500s
With in 7 days of travel• The base fare
could reach upto 4500
Promotional StrategyCommunication Objectives-Indigo will be promoting the below three things majorly as part of its advertising programme-On-time performance , Affordable fares and Hassle free passenger experience.
Advertisement StrategyHoardings at airports with focus on Best on
time performanceAdvertisement through social networking
medium-Facebook,Twitter,YouTube etcCollaboration with Multiplexes in major
cities to promote the airline and its special offers
Advertisement hoardings in multi-storeyed buildings and offices
Advertisements in magazines targetting Urban population
Advertisement Strategy contd..Sponsering fashion shows, talent hunts, New
Year parties etcCollaboration with consumer banks, credit
card companies, hotels, ticketing websites to promote special offers, discounts and cash back
Giving IndiGo promotion a local flavour by promoting in regional languages in respective sectors
Sending special offer details to frequent fliers by sms, email etc
Targeting foreigners in Tourist circuits
Advertisement through Social Media
The IndiGo AdvantageMultiple Short haul point to point flightsUsing only one type of aircraft to minimize
Maintenance overheadsLean Operating Strategy to maximize
efficiency Minimum turn around time, keeping Aircraft
in air for most of the timeEmployee welfare and resultant loyaltyMaking Low budget flying a pleasant
experience
References
IndiGo Airline - www.goindigo.com Interglobe – www.interglobe.com India Ministry of Civil Aviation -
http://civilaviation.nic.in India Directorate of Civil Aviation - http://dgca.nic.in Airport Authority of India - www.airportsindia.org.in Wikipedia – www.wikipedia.org Bureau of Civil Aviation Security (India) –
http://bcasindia.gov.in http://www.ibef.org/industry/aviation.aspx Outlook Magazine Indian Railways www.indianrail.gov.in
Thank You
- Priyank- Purnendu- Rachna- Rahul Raj- Rahul Jain