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Why IndiGo's Business Model is so successful?

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IndiGo’s Company Overview


IndiGo, officially known as Interglobe Aviation Ltd., is India's largest passenger airline with a market share of 53.5% as of October 2020. Founded in 2006, IndiGo has quickly grown to become a key player in the Indian aviation sector, offering low-cost air travel to domestic and international destinations. With its headquarters in Gurgaon, India, IndiGo operates from 66 domestic and 24 international destinations. The airline is committed to providing an efficient, on-time, and hassle-free experience at low fares, and is recognized for its innovative approach to services.

Business Model:

IndiGo operates on a low-cost carrier business model. This model is characterized by a focus on cost efficiency and simplicity of operations. IndiGo achieves this by primarily using a single type of aircraft - the Airbus A320, which allows for better management of maintenance and operational costs. The airline also maximizes aircraft utilization by maintaining quick turnaround times and high-frequency operations. Further, IndiGo follows a point-to-point network model, flying directly between destinations without stopovers, which significantly reduces travel time and operational costs.

Revenue Model:

IndiGo's revenue model is multi-faceted, with the main source of income being ticket sales. The airline's low-cost model allows it to offer competitive fares, attracting a high volume of passengers and thereby driving revenue. In addition to ticket sales, IndiGo also generates revenue from ancillary sources such as baggage fees, in-flight meals, seat selection charges, and priority check-in. The airline also earns through its cargo operations, IndiGo CarGo, which provides domestic and international cargo services. Moreover, IndiGo has a loyalty program, '6E Rewards', which not only ensures customer retention but also contributes to the revenue through its membership fees.

https://www.goindigo.in/

Headquater: Gurgaon, Haryana, India

Foundations date: 2006

Company Type: Private

Sector: Transportation

Category: Airlines

Digital Maturity: Digirati


IndiGo’s Related Competitors



IndiGo’s Business Model Canvas


IndiGo’s Key Partners
  • Diners Club International (together with Citibank India)
  • Farnair Group
  • Indian Government
  • Travel Agencies
  • Manufacturing companies
  • Maintenance and repair organizations
  • Vendors
  • Fuel consortium partners
  • Oil companies
  • Investors
  • Holding company - Interglobe Group
  • Promoters Rakesh Gangwal and Rahul Bhatia
  • InterGlobe Enterprises is a limited company having its headquarters in Gurugram
  • Google
IndiGo’s Key Activities
  • Operations and management
  • Marketing and promotions
  • Networking
  • Security and inspections
  • Passengers services
  • Legal
  • Aircraft maintenance
  • Projects
  • Tourism
  • Programming
  • Design
  • Training
  • Financing
  • Logistics
  • Recruitment
  • Compensation
  • Marketing sales
  • Community affairs
IndiGo’s Key Resources
  • 6172 employees
  • IndiGo has become the largest passenger airline in India in terms of passenger market share
  • Modern Airbus A320 aircraft fleet
  • Airbus ATR-operated flights
  • Youngest fleet size amongst major carriers having more than 70 aircraft
IndiGo’s Value Propositions
  • IndiGo is built for people with things to do
  • People who have places to be
  • People who anticipate and appreciate a low-cost airline that won’t compromise on quality
IndiGo’s Customer Relationships
  • Quietest cabin
  • Most efficient airline
  • Passively by online booking
  • Actively by online check-in
  • By phone
  • In person
  • Help videos
  • Blog posts
IndiGo’s Customer Segments
  • Air cargo market
  • Economy class travelers
  • Travelers who prefer to pay only for the services they take rather than be charged a bundled fee
  • People who want to buy cheaper tickets
IndiGo’s Channels
  • Booking engine on its website
  • A 24/7 call center
  • Mobile app
  • Traditional media
  • Travel agents
  • Social media
  • Airport counters
  • Ticketing offices
IndiGo’s Cost Structure
  • Staff
  • Fleet
  • Maintenance
  • Insurance
  • Airports fees
  • Acquisitions
  • Advertising
IndiGo’s Revenue Streams
  • Ticket sales
  • Ancillary services like extra baggage and pre-paid meals
  • Cancellation fees
  • Partnership agreements
  • Cargo
  • Chartered flights

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IndiGo’s Revenue Model


IndiGo makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Aikido
  • Add-on
  • Low cost
  • No frills
  • Customer relationship
  • From push to pull
  • Customer loyalty
  • Dynamic pricing
  • Product innovation
  • Corporate innovation
  • Cross-subsidiary
  • Advertising
  • Cash machine
  • Direct selling
  • Archetypes of business model design
  • Codifying a distinctive service capability
  • Channel aggregation
Analytics


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  • Sectors
  • Categories
  • Companies
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IndiGo’s Case Study


IndiGo's CASE STUDY: Unpacking the Secrets of India's Most Successful Low-Cost Airline

Founded in 2006, IndiGo, officially known as Interglobe Aviation Ltd., stands as a testament to the dynamic evolution of India's aviation sector. With a commanding market share of 53.5% as of October 2020, IndiGo is India's largest passenger airline (CAPA India, 2021). The journey from inception to dominance in the aviation market wasn't a stroke of luck, but rather a sophisticated interplay of strategy, innovation, and unwavering focus on customer-centricity.

The Genesis of IndiGo

When we ventured into the market, air travel in India was characterized by legacy carriers with high operational costs and varying reliability. Recognizing the burgeoning middle class and their increasing need for affordable air travel, we seized the opportunity to address a glaring market gap. IndiGo was founded on the principle of providing an efficient, on-time, and hassle-free travel experience at competitive fares, catering primarily to budget-conscious domestic travelers.

A Model for Success: The Low-Cost Carrier Approach

Our success can largely be attributed to our low-cost carrier business model. This model, characterized by cost efficiency and simplified operations, focuses on several key factors: Fleet Uniformity: By exclusively operating a single type of aircraft, the Airbus A320, we've streamlined maintenance and training operations, significantly lowering operating costs. As of the latest data, IndiGo's fleet includes over 270 aircraft, predominantly the A320 series (CAPA India, 2021). Point-to-Point Network: We operate a point-to-point network rather than the traditional hub-and-spoke model, allowing direct flights between destinations. This reduces layover times, enhances aircraft utilization, and cuts down operational costs. Quick Turnaround Times: Our rapid turnaround times ensure maximum aircraft utilization. By keeping ground time to a minimum, we can operate more flights per day, thereby driving revenue.

Revenue Model: Diversification for Stability

Our revenue model is not confined solely to ticket sales. While affordable fares drive high passenger volumes, additional revenue streams bolster financial stability: Ancillary Services: We have capitalized on ancillary revenue streams such as baggage fees, in-flight meals, seat selection charges, and priority check-ins. Ancillary revenue constitutes around 15% of our total revenue, as per the latest quarterly reports (IndiGo Q3 Results, 2023). Cargo Operations: Our ambitious cargo segment, IndiGo CarGo, has expanded both domestically and internationally. Cargo operations have gained momentum, contributing significantly to our diverse revenue streams. Loyalty Program: The '6E Rewards' loyalty program fosters customer retention and adds a steady stream of recurring revenue through membership fees. This program has seen a substantial uptake among frequent flyers and corporate travelers.

IndiGo's Digital Prowess: Leading the Path

In the digital age, we understood the imperative need for robust digital infrastructure. With a user-friendly website, efficient mobile app, and active engagement across social media platforms, we offer seamless booking and check-in experiences. Our website and mobile app account for a considerable portion of our bookings, reflecting high digital maturity.

Operational Excellence: A Pillar of Our Business Strategy

Operational excellence remains a core tenet of IndiGo's business strategy. Our relentless focus on reliability, cleanliness, and punctuality has cultivated customer trust and loyalty. According to the latest punctuality statistics, we boast an on-time performance rate of over 85%, a figure that consistently places us among the top performers in the industry (DGCA, 2023).

IndiGo's Social Impact: Creating Value Beyond the Balance Sheet

We don’t just fly planes; we elevate lives. IndiGo has significantly contributed to the social fabric by providing affordable travel options, thus enabling broader social and economic activities. By democratizing air travel, we enhance connectivity and liveliness across different economic segments. Additionally, our operations create thousands of jobs directly and indirectly, positively impacting the socio-economic landscape.

Pillars of Robust Partnerships

Collaborations have been essential in our growth trajectory. Key partnerships with Diners Club International, Citibank India, Farnair Group, and various other vendors and fuel consortium partners, have fortified our service offerings and operational efficiencies. Our strong relationship with Airbus has also ensured a modern, efficient, and reliable fleet. Our journey would be incomplete without acknowledging the role of our stakeholders. From the Indian government to investors and maintenance organizations, the collaborative ecosystem has supported our rapid ascent and sustained growth.

Customer-Centric Approach: Meeting and Exceeding Expectations

Central to our ethos is a commitment to addressing customer needs. By offering an array of customizable services, we ensure passengers only pay for what they need, embodying our 'no-frills' philosophy. Our straightforward pricing model, designed for transparency, resonates well with both frequent flyers and occasional travelers.

Experts Speak: What Sets IndiGo Apart?

Aviation expert Kapil Kaul articulates, 'IndiGo's core strength lies in its simplicity and disciplined execution of the low-cost carrier model, combined with high operational reliability' (HBR, 2021). Peter Harbison, Executive Chairman of the Centre for Aviation, adds, 'Their strategic fleet uniformity, operational efficiency, and customer-centric innovations have placed IndiGo in an enviable position in one of the most competitive aviation markets' (CAPA, 2022).

The Road Ahead: Navigating Future Skies

As we look to the future, our focus remains steadfast on enhancing our service quality while maintaining cost efficiency. Plans to expand our fleet, explore new markets, and introduce innovative customer-centric offerings are already in motion. In an era of dynamic aviation needs, our ability to adapt, innovate, and prioritize customer satisfaction ensures we remain an industry leader, not just in India but on the global stage.

Conclusion: IndiGo's Blueprint for Success

IndiGo's ascendancy in the Indian aviation landscape is a remarkable case study in operational excellence, strategic foresight, and customer-centricity. Our low-cost model, diversified revenue streams, robust partnerships, and unwavering commitment to quality have collectively scripted our success story. IndiGo—built for people who value time, efficiency, and affordability. Ready to take off to newer heights, one flight at a time. Sources: - CAPA India. (2021). Indian Aviation Market Share. - IndiGo Q3 Results. (2023). Financial and Operational Performance. - DGCA. (2023). On-Time Performance Statistics. - Harvard Business Review. (2021). Expert Opinions on IndiGo’s Business Model. - Centre for Aviation. (2022). Analysis of IndiGo’s Market Position.


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