IndiGo's Dominance: The Secrets Behind India's Largest Airline

IndiGo: India's Leading Airline — Network, Fleet, and Global Ranking

Indigo Airlines is the largest airline in the country today, which is quite famous for its network and freight size. With 63% market share, no other airline comes close to it like Air India, Spice, Asian Air etc. More than 2,200 flights are operated every day, covering 126 destinations, out of which 89 are in India and 37 are international. There are 437 aircraft and also carry 10 crore passengers in a year. With this, it has not only become the largest airline in the country but also the second-largest airline in Asia and is ranked seventh in the world on the basis of total number of flight departures.

Ambitious Expansion Plans: Doubling the Fleet by 2030

Now, IndiGo is not satisfied with this and wants to further increase its size. To double it's fleet by 2030, it has ordered 500 new airports from Air Bus, which has become the biggest order of commercial aviation till date. Earned ₹ 71,000 crores last year out of which they had a profit of ₹ 8,000 crores. Using this, they are buying many new planes and are also adding new destinations in both domestic and international markets.

The Genesis of IndiGo: A Low Cost Vision Takes Flight (2005-2006)

Indigo Airlines was started in 2005 when Rahul Bhatia and Rakesh Gangwal started it together. Rahul Bhatia was the founder of InterGlobe Enterprise, a Gurgaon based travel and logistics company and Rakesh Gangwal was an experienced aviation expert who had previously worked with big airlines like United Airlines and US Airways of the USA and had a company of his own. In the US itself, both of them were running under the name of Kem Investment. Together they signed a partnership deal, giving birth to IndiGo. InterGlobe's share in it was 51.12% and Kem Investment's share was 47.88%. They directly ordered 100 aircraft from Air Bus for their A3200 narrow body aircraft. This in itself was considered a very brave decision for a small airline which has just started, and 100 Aircraft are being ordered together, this is because buying a new aircraft is a very capital intensive task. Each plane costs up to ₹  8000 crores. At that time, players like Kingfisher Airlines, Jet Airways, SpiceJet and Air Deccan were already strong in the market. It was very difficult for a new airline to create a space in between. Rahul Bhatia and Rakesh Gangwal focused on a low cost model which had no frills service i.e. no free miles. Or they did not provide luxury service, they charged extra for everyone. This strategy helped them in reducing their ticket prices. Focusing on this, they started operations from August 2006. The month after receiving the order for their first aircraft, the first route was from New Delhi to Imphal with a stopover in Guwahati in between.

Early Growth and Strategic Cost Management (2007-2008)

They got off to a strong start. By the end of 2007, they had 15 Air Bus A320 aircraft. To keep costs down, they sold and used the lease back model in which after purchasing the aircraft, they sell it to a leasing company and then take the aircraft back on lease from them. This makes it easier for them to manage cash flow because they do not have to pay for the entire aircraft but can pay on a monthly basis. In the first year of operation, more than 10 lakh passengers traveled with IndiGo along with big cities like Delhi, Mumbai, Chennai, Kolkata, Bengaluru and new destinations too.

Navigating Economic Turbulence and Industry Downturn (2008)

But the very next year itself, airlines around the world got a big shock when the demand for air travel fell drastically. This became a big problem for the Indian aviation industry too. IndiGo started cost cutting, streamlined the routes rapidly, ran only cost effective operations between big cities and closed the rest. By keeping the airfares low, they maintained the passenger traffic but the rest of the airlines of the country were not successful in doing so, especially Kingfisher which It was already incurring external losses and could not recover after that and went bankrupt in 2012. This entire period was quite turbulent for the airline industry. Fuel prices were also rising along with the recession. Government regulations were also getting tight. Crude oil prices had reached the balers at $40 which significantly increased the cost of operations of the airline. IndiGo was using fuel efficient aircraft but to make it more efficient, they paid more attention to direct routes.

Sustained Growth and Profitability Amidst Challenges (2009)

Despite these challenges, Indigo maintained growth. Handled more than 35 lakh passengers, up three from last year. At the same time, they were successful in increasing their market share to 10%, which is a huge achievement for a small new airline. They also reached more than 17 domestic destinations. In 2009, IndiGo became profitable for the first time and also became India's fastest growing airline. At that time, they had 25 A320 aircraft and handled more than 50 lakh passengers in a year. Not only this, they made a difference in the entire industry. It also showed the best on-time performance between 85 to 90%, which became a key factor in its low cost business model.

Overhauling Established Players and Key Leadership (2010)

On the basis of high punctuality, low cost and big flights, IndiGo overtook Air India by achieving 17.3% market share and became the third largest passenger airline of the country. In 2010, King Fisher Airlines and Jet Airways were bigger than this. Both the founders had a big role behind the initial success. Rahul Bhatia who was focusing on strategic growth and business expansion, designed a low-cost model of the airline that provided only essential services so that fares could become competitive. Maintained financial stability through InterGlobe Enterprises and also won the trust of investors. Rakesh Gangwal was focusing on operational excellence and cost management. His specialized experience in the aviation industry came in handy. He helped in aircraft flight planning and Streamlined operations, ensured maximum utilization of each aircraft. As soon as a plane lands, it starts getting ready for the next flight and takes off within 30 to 40 minutes. Their strategy was working, hence both demand and profit kept increasing.

Aggressive Expansion and Entry into International Markets (2011-2012)

Seeing this, IndiGo decided to order more new planes. Took several important steps for its expansion and development in 2011. Ordered 180 new A320 aircraft whose value was ₹ 5 million i.e. ₹ 1,30,000 crores, which became the largest order at that time. In the same year, on completion of 5 years of its operations, IndiGo also got permission to operate on international routes. It flew its first flight between Delhi and Dubai. Then the next year in March 2012, it became the most profitable airline of the country, leaving Kingfisher Airlines behind. In terms of passengers, Kingfisher Airlines also had to declare its bankruptcy and Indigo took over its market. Within a few months, it became the largest airline in the country, leaving Jet Airways behind, with 27% market share.

Expanding Domestic Reach and Navigating Regulatory Hurdles (2012-2014)

Now even after achieving this new milestone, they continued their expansion. Now they started reaching out to smaller cities as well, which other airlines are not able to do. Over the years, under the UDAN scheme, it started its services in tier two and tier three cities like Hubli, Gorakhpur and Kannur. In 2013, IndiGo became Asia's second fastest growing low cost airline after Indonesian liners. But in the same year, IndiGo had to face some restrictions from the Civil Aviation Ministry. The government allowed them to acquire only five new aircraft, which was later increased to nine. They did this because at that time, only two airports were operating in the country, Delhi and Mumbai, which were facing a lot of congestion. Due to the increasing number of airlines and demand, people had to stand there for hours. There was also a shortage of runways and parking slots in the lines and the operation of new aircraft became difficult. The government wanted the existing infrastructure to be improved before bringing in new aircraft, that is why they banned this. IndiGo then started managing its flights better due to that and it made its operations more efficient, reduced the turnaround time so that there was less need for new aircraft and operated only the main efficient and more profitable routes. He was continuously talking to the Union Ministry and told that his expansion plan is based on safety and efficiency. Later the Ministry listened to him and gave permission to acquire nine new aircraft. Finally, in 2014, again the Civil Aviation Ministry The ban was completely lifted.

Continued Expansion and International Destination Growth (2014-2019)

IndiGo again started working on its expansion plan. Next year, they ordered 250 Airbus A320 Neo aircraft, which became the world's largest order at that time. Similarly, when they started receiving deliveries and increased their operations, by 2016, their market share crossed 40%. The total destination also increased to 46, including both domestic and international, such as Abu Dhabi, Dubai, Muscat, Doha. Bangkok, Singapore, Kuala Lumpur and London. Apart from this, for the flight scheme, he also ordered French Italian ATR 72 short range propellant aircraft which can fly over short distances and at short distances. By 2019, his aircraft had become a flat size of 250, and he was operating 10,500 flights a day. In the same year, he ordered 300 Airbus A320 new aircraft. Breaking his own old record, he was able to order the world's largest aircraft because Jet Airways was also closed in the same year, due to which he got a major part of the market share.

The COVID-19 Pandemic: A Crisis and a Catalyst for Resilience (2020-2021)

The beginning of 2020 was also for IndiGo. It was great, they had taken a market share of more than 50% and started serving more than 24 international destinations, but as soon as March came, everything changed. An incident happened which shook the aviation industry all over the world. The Covid-19 pandemic became not just a health crisis but an existential crisis for the airlines. The Government of India announced a lockdown in the entire country and on March 25, all the domestic and international flights of the country were stopped. This was a huge blow for IndiGo. Their daily flights went from 1500 to zero. Revenue dropped by 90% but fixed costs still continued like aircraft lease payments, employee's salary and airport charges etc. Their cash reserves started depleting at a fast pace. Meanwhile, IndiGo CEO Ronojoy Dutta gave a statement that this is the biggest crisis of the aviation industry. Only those airlines will survive due to this. And will focus on cost control. During this time, IndiGo took some important steps which helped in their savings and revival. They utilized their cash reserves well and went on cost cutting. Salaries of all senior executives were cut by 25 to 30% and in July, 10% of the workforce was fired. Talks were held with the aircraft leasing company to defer payments or discounts were sought. During this time, they reduced their aircraft operations. Apart from this, cargo in cabin flights were also started in which they started transporting cargo inside the passenger cabin. In the whole of 2020, they operated more than 2000 such cargo on flights in which important goods like medical supplies and essential goods were transported. On May 25, about 2 months after the closure, the government gave permission to restart the flights in a phased manner. The very first flight was flown. After this, following the proper safety norms, sanitized cabin PPE kits and contact check-in were provided to minimize the spread of COVID-19. PPE gowns were made mandatory for middle seat passengers. Initially only 30% of the flights were allowed, which later increased to 50%, then 80%. Soon, they started operating 600 flights a day. By December, 70% domestic capacity had been reached, but the problem was not completely averted yet because the second wave came from April to May 2021 which was more severe than before. The demand for flights again fell by 40%. For the third time, Indigo had to cut salaries and cost cutting. International flights were stopped again. Indigo brought Mission Vande Bharat and expatriation flights in which the Indians who were stuck outside were brought back. They carried cargo. Also performed operations and helped in transporting vaccines. They transported approximately 8 crore vaccines, which was also a big humanitarian effort.

Post-Pandemic Recovery and Future Diversification (2022-2023)

In 2022, when the impact of COVID-19 started reducing, the aviation sector rebounded rapidly. IndiGo aggressively started expansion again and announced plans to launch new routes and aircraft. This flat size will return to more than 300 aircraft in 2022. India's market share reached 56% and in the same year they also entered the freighter business with two cargo airports. When Tata bought Air India in 2023 and ordered 470 new aircraft to overhaul it. IndiGo felt that they also needed to step up, so they ordered 500 new aircraft. Ordered Airbus A320 and A321 Neo, which became the largest order in the history of commercial aviation. Started new routes in his name for the third time. He also planned to launch business class to Vietnam, Turkey, Maldives and Africa, which is quite different from his low cost only approach. Will start it on some routes where there is little demand for business class. By 2023, he had covered all the losses of COVID-19 and again became profitable once again, the crisis of Covid-19 turned it into an opportunity. Other airlines could not survive so well but Indigo was able to do so by taking cost cutting measures and increasing efficiency. Now they are focusing on diversification as well, hence more cargo services, international operations and by introducing business class so that it would be better equipped to handle such major disasters, in the same year, they faced another challenge when due to some problems in the Pratt & Whitney engines used in their planes, they had to ground more than 70 aircraft on government orders, which had a huge impact on their operations. They solved this by entering into waitlist agreements and adding Boeing 777 and 787 to their fleet. Bring along the entire crew and pilots so that they can maintain the operations. Within the waitlist, one airline gives the aircraft to the other airline along with full maintenance of crews, pilots and insurance and the other airline pays them but on the basis of hours, as much as they are using those services. This is how IndiGo solved the problems of grounding of its airplanes. By 2023, IndiGo's international market share will reach 17.2%. It has increased from only 9.6% in 2019 i.e. 17.2% of all international flights operated from India are owned by Indigo.

Addressing Future Challenges and Maintaining Market Dominance (2024)

Next year in 2024, they have also ordered Airbus A35900 wide body aircraft, whose delivery will start from 2027. This is their first wide body aircraft which they will use in long distances. Indigo till now uses only narrow body aircraft which have six seats in one aisle and wide body. Up to 10 people can sit in a row and there are two aisles, this will enable them to carry more people in one aircraft. Due to rising fuel cost and engine issues for long distances, they had to face a loss of ₹ 990 crores in the third quarter of 2024. The solution to this is to take steps like expanding the international network and starting business class service under their Vision 2030 plan so that the revenue stream can be diversified. Named Indigo Stretch which has already started operating in some routes like Delhi Mumbai Route, Delhi Bangalore Route and Mumbai Bangalore Route, they have done this for the first time and if they like the results then they will increase it further. Another challenge they have had to face in the last few years is the stiff competition from international airlines and the infrastructure of some airports is not good enough to operate more flights, for that they keep talking to the government about which airport. They have to upgrade their international routes and have also increased the speed so that they can manage better with international flights. They have set a target of doubling their size by 2030.

IndiGo's Success Factors: Low-Cost Model and Operational Efficiency

Due to all these reasons, it has become the largest airline in the country today, in terms of both flight size and destinations. With more than 2200 daily flights, 126 total destinations, out of which 89 are domestic and 37 are international, it has become the seventh largest airline. It has a flat size of 437 aircraft in the world on the basis of number of departures, most of which are of the Airbus A320 family. There is currently a back lock order of 932 aircraft which will be fulfilled in the next 10-15 years. Handles more than 10 crore passengers in a year and earned a revenue of ₹ 71,000 crores last year. Out of which only a profit of ₹ 8,000 crores were made. Why couldn't the other airlines do this? This is what Indigo has done. Even established big airlines lagged behind like Air India etc. There are many reasons for this. They have always kept the cost low compared to their competitors which is very important in a market like India where people are very price conscious. They provide only the essential services in their ticket price and all the rest come along with extra charges.

Advantages of IndiGo's Fuel-Efficient, Single Aircraft Fleet

They keep a huge flood of highly fuel efficient aircraft which can cover the routs at low cost. Only one thing they focus is on the type of aircraft, Airbus A320 family, which gives them a lot of discount on placing bulk orders and the operational costs also remain low, but it has a disadvantage that if some issues arise in one aircraft, then they have to ground all the same aircraft as recently seen with their Prynne Whitney engine aircraft. They can also save maintenance and training cost because the same crew can maintain each of their planes. Using efficient aircraft reduces the cost, which is 40% of the total expense of the airline.

IndiGo's Rapid Turnaround Time and Enhanced Aircraft Utilization

They also kept the turnaround time of only fuel flights fast. From the landing of a flight to its departure, it takes only 30 to 35 minutes. In the same time, they do deboard cleaning and boarding of passengers. With this, they are able to operate up to 10 flights in a day from one aircraft whereas other airlines only six to seven. Apart from this, she can also make sales in a day.

Leveraging Sale and Leaseback Model for Strong Cash Flow

They kept the cash flow strong with the end lease back model. In this model, they buy the plane and sell it to a leasing company which also has other investors from whom they take the aircraft back from them on lease. There may be outside investors in that company which may also include other airlines. It depends on this that they keep the cash flow strong, that is, they do not invest the entire money in one aircraft, they take it on lease every month so that the cash flow remains. And at the same time, they can also escape from the ups and downs of the aircraft market, like Boeing 737 Max had become very grounded in the last two years, so it puts more pressure on the leasing companies rather than the airlines.

Commitment to Punctuality Through Technology and Efficient Operations

Due to this, they can also pay better attention to their punctuality, due to which people have confidence in them. IndiGo's average on time performance has been 85 to 90% for the last many years, which is much better than the competitors, according to the data of DGCA. In 2019, IndiGo's on-time performance was 89% while Air India's was only 68%. It has also invested in many technologies to maintain punctuality. Cat 3B systems for take-off and landing in low visibility conditions. A CARS technology for recording turnaround and take-off time. Due to this reason, it has become the most punctual airline in India and not only in India this year. In 2022, it had become the fifth most punctual airline in the world with 83% on-time performance.

Strategic Network, Avoiding Costly Acquisitions, and Capitalizing on Competitors' Failures

Apart from this, providing its services from small cities to big international major hubs, providing better connectivity is also one of the reasons behind its success. Apart from this, it did not make big expensive acquisitions like its competitors like Air India, King Fisher and Jet Airways and mostly avoided financial mistakes. And King Fisher was mostly bankrupt due to its own mistakes and after its closure, most of its market share was taken by IndiGo.

IndiGo's Record-Breaking Aircraft Orders and Expansion Strategy

Now let's talk about IndiGo's largest aircraft order so that we can know the true perspective of IndiGo's orders. In 2011, the world's largest airline American Airlines ordered a total of 460 aircraft to Boeing and Airbus, which then became the world's largest order in terms of aircraft count in February. In 2023, Air India again broke this record by ordering 470 new aircraft from both Airbus and Boeing. Its total cost was estimated at ₹ 6,000 crores. IndiGo again did not consider it right to lag behind and placed its order for 500 aircraft of the Airbus A320 family only 4 months after this order. Although its cost was less, ₹ 4,80,000 crores, but it was given to a single aircraft manufacturer. Now the biggest order has been made, both these orders become more significant considering that the American Airlines which were placing their orders were mainly to replace their old planes whereas Air India and IndiGo are placing them for their flight expansion i.e. these planes will increase. Both these airlines are trying to grow rapidly which reflects the growing aviation market of India, but IndiGo has also decided to acquire wide body aircraft. Have also planned for which in April 2024 they have ordered 30 Airbus A350 900. We will talk about it further.

The Competitive Landscape: Air India's Revival and the Fall of Others

Now privatized Air India is the second largest airline in the country. Tata Group has merged Air India and Vistara. Air India and AIX Connect to form two airlines, one of which will be a low cost carrier and the other will be a full service. IndiGo and Air India together make up about 80% share of the country's domestic aviation market. This share of IndiGo alone is 63% and the remaining 25-26% is of Air India, but before its privatization and expansion, Air India and now defunct Indian Airlines were continuously running in loss. Indian Airlines was merged into Air India in 2011 to reduce their losses, but it did not help much. Finally, the government decided to sell it and Tata Group bought it which they had. Air India is back today after 70 years. It is not only the second largest airline of the country but also the sixth largest airline of Asia, which has 25% share of India's domestic market and 12% of the international market. It comes second after IndiGo. Indigo's other competitors have not been so fortunate. Jet Airways and Kingfisher Airlines, which were once among the largest airlines in the country, closed down from their respective regions and left the space vacant for IndiGo. In 2016, Jet Airways was operating 300 flights every day to 74 destinations across the world but due to competition from IndiGo and SpiceJet, they had to reduce ticket prices so that they went into loss and its market share kept falling. On the other hand, Kingfisher Airline got bankrupt due to its wrong financial decisions like buying loss making Air Taken which could never become profitable and in the recession of 2008, it was not able to do cost cutting properly, hence it was closed in 2012.

IndiGo's Future Plans: Expanding Fleet, Regional Connectivity, and Wide-Body Aircraft

Now let's talk about the future plus of Indigo. The delivery of their air bus A321 XLR will also start from this year. They have 69 planes. This is a new type of plane in the A320 family which will be mid-sized and will have a long range. XLR means extra-long range with a range of 9300 km. Also, their plan is to buy more regional aircraft like ATR72, Airbus A220 or Embraer E175 to increase the regional expansion. If we combine all the orders of IndiGo, then from June 2023 they will be 1000. They have ordered more than 100 planes, out of which more than 900 have not yet been delivered and are in the backlog, that is, they have ordered the maximum number of aircraft in the world which are currently being manufactured.

Strategic Advantages of IndiGo's Airbus A320 Family Focus

Another thing might be coming to your mind that what is special about the AirB A320 family is that IndiGo is after them and keeps buying these types of aircraft again and again. So, it has some strategic and operational resources, this is their low cost. And it is a perfect match for high efficiency operations as it is slightly more fuel efficient than its competitor Being 737 Max, fuel is the biggest expense for airlines, which IndiGo has been able to reduce a bit by using fuel efficient aircraft. IndiGo has used PAT & WITYTNI's new GTF geared turbo fan engines which are more fuel efficient than normal operating the same type of aircraft. Airlines save a lot of money in operations, but there can also be a problem like we saw recently that 70 of their aircraft had to be grounded due to some problem in Pat and Whitney engines, they cannot fly flights until they are resolved, but everything from pilot training, crew management to maintenance etc. becomes cheaper by running the same type of aircraft. Features and operation of different models. The method of aircraft is very different for which complete training is done from the very beginning. Airlines can avoid it because of having the same type of aircraft. They have to hire some engineers who can handle all the aircraft and it is easier to get spare parts because they store only one type. They do not have to spend so much on inventory. Also, by ordering the aircraft in bulk, they also get special discounts. And also because by mixing aircrafts with being Airbus, their maintenance and crude cost increases, which would be against IndiGo's low cost model. The cabins of the air bus A320 are also slightly wider than the Being 737, so that the passengers can get better legroom and comfort. The cabin width of the A320 is 7.4 feet, while the cabin width of the 737 is 7.1 feet. The seat size and eye space are also slightly more in the air bus. Apart from this, the cabin of Boeing There were many major issues in the 737 Max aircraft in 2018-19 in which the crashes of Lion Air and Ethiopian Airlines broke the trust of Boeing. 73 Maxes from all over the world were grounded in the market for 2 years till the investigation was conducted on them and its resolution was found. This caused a huge loss to the airline and also could not build trust. IndiGo took only Airbus aircraft for its own business. There was no disruption in operations. All disruptions were avoided. A320 Neo is in the A320 family. Its largest operator is IndiGo in the world with 195 planes and 241 which are on order. Neo is the short form of New Engine Option and Neo also means new in Greek. It is a plane with a capacity of 180 passengers which gives a maximum range of 6300. E321 Neo is a new model in the same family whose IndiGo has become the second largest operator in the world. Along with 131 aircraft, IndiGo has also ordered 587 more new aircraft. With 230 passenger capacity, its range is also slightly higher at 7400 km, which is a better option for routes with slightly longer distances and also for those with more passengers. It's XL R Extra Long Range variant.

Narrow-Body vs. Wide-Body Aircraft: IndiGo's Strategic Choice and Future Expansion

You must be wondering what is the difference between narrow and white body aircraft, so let's talk about it. Narrow body aircraft is of slightly smaller size. The diameter of the entire fuselage arch is less than 4 meters, whereas white body aircraft is a little wider. With a diameter of 4 to 6 meters, narrow body can accommodate six seats in one row with one oiler, while white body can accommodate 10 seats in two. In the middle with oils, 100 to 250 passengers can travel in narrow body, whereas in white body, 200 to 800 passengers can also travel. Narrow body is more fuel efficient for short distances, and wide body is better for slightly longer distances, and due to being small the take off and landing distance required in the runway is also less, so they can operate in most of the airports. Special airports are required for wide bodies where the length of the runway is 3 or 4 km.

The State of Other Airlines in India: Challenges and Market Share

If we talk about other airlines in the country, apart from IndiGo and Air India, Spice Jet and Aeon Air are also present here. Except IndiGo, all of them are running in losses but PJT is also a low cost carrier which has about 5% market share and is the third largest airline in the country. Mal functioning due to rising crude oil prices since 2012. Due to several accidents involving plane equipment and later due to COVID-9, Spice Jet is facing continuous losses. It currently covers 73 destinations. Akasa Air is the fourth largest airline in the country with 4.5% market share. It has been established quite recently. It is a very new airline and will start operations in 2022, so it is natural for them to have losses until it builds its wide network.