1.

Functional level strategies

Operations:
1. Single type of aircraft:
Indigos whole fleet consists of A-320-232 aircraft while Air India, Jet Airways and Spice
Jet use 10, 9 and 3 different makes of aircraft respectively. This result is in greater
flexibility by making use of the same crew from pilots to flight attendants to the ground
force thereby cutting hiring, training and up gradation costs.
2. Single Class
Having only Economy class means that Indigo does not have to spend time, money and
crew on privilege passengers. They also don't need to maintain expensive lounges at
airports further reducing costs.
3. Low average fleet age
Indigo has an average fleet age of less than 3 years. A younger fleet means less
maintenance costs. Indigo plans to maintain a lower fleet age as all its aircraft are leased
for a period of 5-6 years. This way they avoid the D-Check which is done after 8 years of
operation of an airplane. (A D-check may take up to 2 months during which the aircraft
remains out of service.)
4. Fuel
Domestic fuel taxes can be as high as 30 per cent along with an 8.2 per cent excise duty.
As a result, fuel for Indian airlines accounts for about 45 per cent of total operating costs,
compared to the global average of 30 per cent. Indigos aircraft try to save fuel by using
software to optimize flight planning for minimum fuel burning routes and altitudes and
also by making use of latest fuel saving technology.
5. Route Planning
Indigo operates over a lesser number of destinations than its competitors but with a
higher frequency - with a fleet of 78 planes for 36 destinations while Spice Jet flies to 46
destinations with 58 planes.. The network maps show that all Indigo's destinations are
connected to at least two cities while most are connected to 3 or more destinations,
whereas this is not the case with Jet Airways. This means Indigo can keep its aircraft in
the air for a longer period of time and save up on airport charges. Because of this Indigo
has a high aircraft utilization rate of more than 11.5 hours per day per plane. This also

means that customers don't have to look for connecting flights with other competing
operators.
6. Tightly framed maintenance contracts:
Indigo has a Power by the Hour contract with International Aero Engines (IAE), which
provides the engines that put the onus of performance delivery on the manufacturer.
Indigo has similar agreements with Airbus, as well as with the vendors for other critical
components. These contracts probably come at a premium but it means that Indigo does
not have to pull out planes from service for repairs and also does not have to maintain a
large inventory of spares.
Marketing :
1. Little advertising spend.
2. High reliance on word of mouth marketing in its early days by establishing a
reputation of being a no frills airline which is always clean and on time.

3. Strategic marketing - Indigo advertised heavily when it started international

operations and also when Kingfisher was going bust, with catchphrases like 'Let the
bad times roll Fly Indigo in good times and in bad times.' taking a dig at
Kingfisher's tagline 'Fly the good times.' This move was criticized but it worked for
Indigo. The result of these operational and marketing aspects is visible in Indigo
which has a market share of 30% and the highest passenger load factor of close to
90% compared to 77% of JetLite and 81% of Spice Jet. This means better revenue
for Indigo compared to its competitors.
Financial:
1. Debt:
Indigo has gone on record to say that the company has practically no debt.
2. Sale and Leaseback:
Leaseback is a financial transaction, where one sells an asset and leases it back for
the long- term; therefore, one continues to be able to use the asset but no longer
owns it. The transaction is generally done for fixed assets, notably real estate, as well
as for durable and capital goods such as airplanes and trains. Indigo has been able

to better leverage this by placing bulk orders for aircraft. In 2005, when Indigo did not
even exist as an entity InterGlobe Enterprises placed an order for 100 A320s during
the 2005 Paris Air show. This was also one of the biggest orders during the show.
The company again placed an order of 180 new A320s in 2011.

B) Corporate level strategies

1. Range and diversity
IndiGo operates 78 planes for 36 destinations- higher frequency
2. Corporate growth
With innovative ideas like check-in counters for passengers with only cabin
baggage so that instead of waiting in lines, they can check-in with an indigo official
with a handheld device, Indigo is creating its own blue ocean.
3. Engagement with various travel web-portals and collaboration with hotels has
increased its social capital. Eg: indigo gives 10% discount on the next travel booking
if customers had stayed in any of the tie-up hotels.
4. Professional Airline management
Indigo paid much attention to its corporate level strategies right since its inception. Its
first CEO, Bruce Ashby, landed in India 18 months before its planned launch.
5. Change in organizational structure
While most domestic airlines are cutting up their staff strength, indigo is speeding up
its recruitment process for more pilots, cabin attendants, and other supporting staff.
6. Salary structure: Unbelievably low
Experienced commanders: 3-4 lacs pm
Experienced first officers: 2-2.5 lacs pm
New employees: 1 lac pm
Cabin crew: 35-50 k pm
Engineering: 75-80 k pm
.

C) Business level strategies

No Frills
The underlying business for a LCC is to get a person from point A to point B. Everything else
is considered to be luxury items or "frills", of which can be acquired for a small fee.

No free food and beverages:

Some of our passengers may prefer not to consume food & beverages when on board. There
are those who prefer to rest throughout a flight or those who prefer having their meals before
flying off. Hence we do not force our guests to purchase something they do not want or need.
Guests are most welcome to purchase food & drinks at an affordable price from our website
before the flight, of from the cabin crew during the flight

Assigned seating
Guests receive boarding passes with pre-assigned seats and are not allowed to request for a
seat change unnecessarily. If the guests have preferences on where or with whom they
would like to seat on the aircraft, they are able to do so by paying a small sum when
checking-in online. This feature is called Pick-a-Seat.

Ticketless airline
Less hassle for the customer, as guests need not worry about collecting tickets before
travelling. This also allows flight to keep the costs down (less paper, lower printing and
distribution costs) and continue to offer low fares to our guests.

Online check-in
Guests are highly encouraged to check-in online so they do not have to waste time lining up
at the check-in counters at the airport. This helps us to improve efficiency and reduce
congestion in the airport.

No refund
Airlines waste a lot of money, time and resources due to refunds and rescheduling when
guests do not show up for a flight. Whether or not a guest shows up, the cost of flight to the
airline is the same. LCCs are strict when it comes to no show guests and do not offer refunds
for missed flights.

Secondary Airports
Low cost carriers mostly fly to and from airports that are not necessarily the busiest. These
are often referred to as secondary airports. Operating from secondary airports is cheaper

than the major airports. They are also a lot less congested and "turnaround times" for aircraft
are a lot shorter.

Lean Distribution System

Distribution costs are something that FSCs most often ignore. Very often, FSCs rely on travel
agents and their sales offices. Furthermore, FSCs tend to complicate their distribution
channels by integrating their systems with multiple Global Distribution Systems, which are
very costly. LCC will keep their distribution channel as simple as possible and will cover the
whole spectrum of the clientele profile. And at the same time, Indigo has an established
system to sell our tickets to the most remote and technology deprived locations, such as in
Myanmar

Internet sales
The bulk of sales (85%) are done via the airline's website, whereby the fares are paid using
credit cards, debit cards or via online banking. This is the most cost effective distribution
channel.

Sales office
Indigo must have a few sales offices. We only establish a sales office if we are confident the
sales derived from the centre will be worth it.

Travel agents
LCCs avoid reliance on travel agents as much as possible. This means that the airlines do
not pay any commission to travel agents, which would otherwise have been reflected in the
fares. Also, as LCCs do not use travel agents, we do not use nor participate in the world wide
reservation systems. This allows us to save costs, which again are reflected in our pricing.

Secondary Airports
Low cost carriers mostly fly to and from airports that are not necessarily the busiest. These
are often referred to as secondary airports. Operating from secondary airports is cheaper
than the major airports. They are also a lot less congested and "turnaround times" for aircraft
are a lot shorter.

Call centres
Ticket sales can be done via telephone - a simple and cost effective method

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