Blue Skies Ahead: How Indigo Airlines Conquered The Skies
- Riddi Senapati
- Mar 24, 2024
- 4 min read
Updated: Mar 12
Something that I've noticed in my recent travels in the past 5-7 years is that I've always travelled through Indigo Airlines, every single time. My family and I have been so loyal to indigo that its practically part of the family now. It has somehow been fixed in our minds that indigo is best - they're easy on the wallet and as long as they're not in the headlines, they're good in our books right? Although this impression could be because we decide to ignore the news, ( because come on, if it doesn't blow up as a meme, it didn't happen XD), It sparked a lightbulb moment: I got curious and decided to find out - What exactly did indigo do to become this huge? So buckle up folks, It's time for a slightly turbulent ride!
Big Bets & Sky high Strategies
First commencing operations on August 4th, 2006, the low-cost carrier grew steadily ever since, becoming one of the most preferred airlines and connected over 75 Indian cities and 25 international destinations.
At the moment, they're operating across 118 destinations, out of which 32 are international.
Indigo kicked off with a plane order so huge, it must have made their accountant's eyes pop wider than their flight's windows.
Indigo in 2005, placed a huge bet by placing a firm order for 100 Airbus A320-200 aircraft with plans to begin operation in mid 2006. The current market value (CMV) of just one of these would be around $125K (source), which means the initial capital invested was around $12.57Mn! (you can buy ~700 acres of land in USA with that kind of money and build a farm there. source)
However, much like their flights, the order arrived pretty late and ended up receiving the entire order by 2014 and had to begin their year in 2006 with just 6 aircrafts. (source). Since we are talking about huge numbers, in 2015, Indigo spent another $29Bn for a 300 Airbus A320neo aircraft, the largest ever order in Airbus history! They're really going crazy with these numbers.
In 2011, Indigo finally received the license for international flights, which started off from New Delhi to Dubai.
The Market Share King: Sitting Pretty on Cloud 9
Indigo started to grab the market share like its the last window seat on a sold out flight.
In 2010, Indigo already had a market share of 17.3% and become the third airline in India.
Just within 6 years of operation, Indigo flourished and was able to surpass jet Airways to become the largest airline in India with a market share of 27%. (Source)
Indigo still continues to be the largest player in the airline industry with a Domestic Market Share of 54%. (source)
In 2015, they announced a whopping IPO of Rs. 3,018 Cr. (equivalent to $440 Mn in 2023).
Indigo is now the fastest growing LLC in Asia, just behind the Indonesian airline Lion Air.
If you're confused, LLC stands for Limited Liability Company. It is one of the business structures, like a corporation, partnership etc. LLC helps you protect your personal assets in case your business is sued. In simple terms, it separates your business and you, so that means that if your business gets sued, only your company is responsible for the lawsuit and you personally wouldn't be liable, so your house or personal accounts etc. are all safe! (Someone should've told this to Kingfisher Airlines XD)
Discounted Dreams & Profits: A Low Cost Love Affair
The unique selling point (USP) is its low flight fares. Indigo's main target were the middle & lower income groups because there were already too many players in the market to cater to the higher income groups. To reduce the cost, they had a strategy:
Use similar kind of flights to reduce training and operation cost.
Have just a single passenger class (yes, indigo has no business class!) & maintain quality of service.
Direct sale of tickets to avoid giving commission.
The income of the targeted groups, lies between Rs. 5 - 30 lakhs per annum, according to PRICE. Indigo serves about 3 Lakh customers in a single day, with a revenue of almost Rs. 194Bn and EBITDA of Rs. 54.75Bn in Q3 of FY2024. (source).
One of their strong points also seem to be the In-Flight meals, which made a revenue of Rs.762 Cr in FY23, which is more than the revenue of Barbeque nation, a restaurant chain with around 200 outlets all over India, which had a revenue of Rs. 761 Cr in FY22.
This also accounted for a 30% YOY growth in their revenue, Where airlines like GoAir have declared bankruptcy, Indigo seems to stand strong.
Contrary to my previous comment about Indigo's flights being delayed, They stand as the most punctual airline in India for 2023 XD.
The Menu Mystery: Decoding In-Flight Meals
Their in-flight meals are also one of their highlights, to say the least. If we just take a moment to calculate how much they may generate through these meals:
One flight with a 60 mins flying time has a capacity of 180 people and one sandwich is charged around Rs.400 (I could buy an entire pizza at Dominos' with that). If even 30% passengers are willing to pay for it, that makes around Rs.21,600 in just one flight.
Indigo flies over 2,000 flight in a single day, let us only take domestic flights for the moment, which would be around 75% (as 32 locations are international), that is 1,500 flights. If we assume that there are equal number of 30 mins and 60 mins flights (as sandwiches are only served in 60 min flights as per Indigo) then around 750 flights in a day, which gives us Rs. 1.62 Cr, just through food, in a single day! I could buy an apartment for myself in Hyderabad (yes, not Mumbai, we all know how sky-high the prices are) with the money that Indigo makes in a single day with domestic flights
All in all, Indigo seems to be the fastest growing affordable carriers in India, but of course, as long as I'm travelling comfortable and safe, I'm happy! :)
Indigo, if you see this, Please give me a free flight ticket for my next trip, I promise I've only written good things :p
~Loyal Indigo Customer
Do you frequently travel through Indigo?
Yes :)
No :(
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