The Success Secrets of India's Only Profitable Airline, IndiGo
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India’a airlines have been struggling in recent years. In 2014, only one major carrier made a profit on the subcontinent: IndiGo. 2015 is shaping up to be better for some of the major carriers in India. This year’s profits are mainly due to the low price of fuel and not any changes in policy or strategy.
Profits in an unprofitable environment
IndiGo is now THE airline to invest in in India. The recent IPO for IndiGo’s parent company, InterGlobe Aviation, generated a huge amount of interest amongst investors. This was to be expected after the airline posted profits in each of the past six years.
How did the low-cost carrier do it? India’s airline marketplace has struggled mightily over the past few years. Major carriers like Spicejet, Air India and Jet Airways are either operating at a loss or making a profit, but not enough of a profit to cover their massive debts.
Simplicity is the secret to success
How has IndiGo managed to stay so far in the black? It has taken some of the best aspects of other successful low-cost carriers around the world and added them to its own operational strategy. One of the airline’s founders, billionaire Rahul Bhatia, is notoriously tight-fisted when it comes to business spending. In a 2010 interview, he famously told a Forbes reporter that he questions himself before spending even a single rupee: “Do I need to spend it? Can I get away without it?”
While generating buzz for the IPO, the airline’s president, Aditya Ghosh, explained its extremely simple philosophy: "We focus only on getting customers from point A to B safely along with their bags and serve food that will not make them sick.” Chuckle at that statement if you want, but this mindset has brought the airline to its current $6 billion valuation.
Taking ideas from other low-cost carriers
Like Southwest Airlines, IndiGo uses one type of airplane, the Airbus A320. They retire aircraft after only six years so that they can keep repair costs to a minimum. The older planes are resold or leased to negate the expense of replacing them so often. Newer aircraft can also fly more often, meaning that IndiGo can offer more flights with a smaller fleet. The carrier has ignored unprofitable routes and only offers service on high-traffic routes.
Unlike some other low-cost carriers, IndiGo is known for polite service, clean aircraft and decent food. In short, the carrier does the basics well, and it doesn’t attempt to do anything else.
Most of IndiGo’s flights are domestic. However, it has started international service to some regional destinations. It currently has flights to Bangkok, Singapore and Kathmandu as well as service to Dubai and Oman. The airline is currently considering the possibility of establishing routes between India and China. The first rumored destination is Kunming, a gateway to the popular mountain attractions of Yunnan Province.
No matter how India’s plan to modernize and democratize its air travel industry plays out, IndiGo is the one carrier that is in the best position to thrive under any circumstances.
More by Josh Lew
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