A lot of us who travel regularly are now coming to one conclusion that Indigo is the best airline we have servicing the customers. But take a moment to think about it .. how is it that they are doing so well, when in the same eco space .. Kingfisher, IA-AI, Spicejet and others are bleeding profusely?
The answer is simple Indigo's operational efficiency is so high that they have made an aggregate profit of close to 2200 crores, when the Industry lost a total of 46000 crores, Spicejet and Jet airways booked a loss of roughly 700 crores, domestic travel decreased by around 4 %, fuel costs went up by 13% and the rupee weakened by 7%. IN this time, Kingfisher tanked to the bottom and IA-AI went on the ventilator supported only by the government infusing a lot money into it regularly.
Indigo has a few strategies which they follow like religion and that is why they have reached where they have.
1. Less number of people per aircraft: This is very self explanatory. They have a people per aircraft ratio of 101. Their rivals have the same ratio of around 130. Less people, less clutter, more work gets done and a low turnaround time is maintained. They have a turnaround time of 31 minutes. Can you imagine, a plane being ready to take off 31 minutes after the last passenger left the cabin from an earlier flight?
2. One set of airplanes: Indigo has a fleet of 74 new Airbus A320 aircraft, the airline offers 459 daily flights connecting to 36 destinations. Spice jet has a mix of 58 aircrafts spread across (Boeing 737-800, Boeing 737MAX, Boeing 737-900ER, Bombardier Dash 8 Q400) and another 70 have been ordered. If you have one kind of aircraft, you need to have spares and servicing expertise in only that engine type. The strategy helps in two ways. One, IndiGo doesn't have to maintain a large inventory of spares or engines. Two, its aircraft are not grounded because some spare parts are not available - that is something the vendors have to worry about. That is reflected in the fact that its technical dispatch reliability of 99.4 per cent is amongst the best in the world. The third advantage is that it prevents the airline from shocks (like a sudden problem in the engine requiring replacement). The difference was visible in 2010 when Kingfisher Airlines had to ground its aircraft because of snags in the engine, but IndiGo which used the same machine didn't because of the vendor support contracts. Even its C-checks, which an aircraft has to go through regularly, are planned with cost in mind. IndiGo gets these checks done in Sri Lanka, unlike its competitors who send their aircraft to as far as Dubai, Hong Kong, Singapore and Kuala Lumpur. The advantage here is that you burn less fuel to reach Sir Lanka and, since all your planes go to one place, you get a better price.
3. No Gourmet Kitchens: You do not walk into an Indigo aircraft expecting to be served 5 star cuisine. This makes them 30% lighter than the other airlines, giving them a good fuel economy which they convert into 27% or roughly 12 hours more of airtime than their closest competitors. And if you know the aircraft industry a bit, you will understand that the only time an airline company is making money is when their flights are in the air and not on ground. And isn't this the exact same reason why KF tanked big time?
And the most important point
4. Operating the high density routes: Despite having a 74 strong fleet they operate to only 36 destination. Spicejet with a 58 strong fleet operates to 54 destinations. This is an indication of spreading yourself too thin. Indigo know their profit routes well and have more flights leaving one destination than one flight leaving many destinations.
So the bottom line is simple if you are ready to chuck the flash and plan your work well, you can make profits in a hostile environment too. Go Indigo! :)
