New Delhi: IndiGo, reportedly the only profitable airline in India, is pushing hard to become India's No 1 by market share. It has cornered 24 percent of the market in April, against 21.9 percent in March. This means that every fourth air traveller within India prefers to take an IndiGo flight.
IndiGo's success is sweeter since it has left behind legacy carriers like Jet Airways which have been around much longer. While Jet began operations in the nineties, IndiGo came in only in 2006 and took just six years to reach the top of the domestic charts.
According to data released by the Directorate General of Civil Aviation (DGCA) today, Jet Airways' market share in April was 21.4 percent; it retains leadership in the market only if taken together with its low-cost subsidiary Jet Lite, which held on to another 6.8 percent of the market.
So what makes IndiGo, the youngest kid on the block, click?
A well-thought-out low-cost model which has been successfully implemented across the world is what aviation experts point towards. IndiGo’s buzz words remain consistent low fares, regular on-time performance and minimal flight cancellations. “In short, we keep the whole business of flying simple for our customers,” IndiGo president Aditya Ghosh had said earlier. He was unavailable for comments on Thursday.
As per DGCA data, IndiGo was able to fill the maximum number of seats (8.2 seats in every 10) in April among all domestic carriers, 87 percent of its flights were on time and only an insignificant 0.1 percent of flights were cancelled during the month. In all, IndiGo had the highest seat factor and best on-time performance (OTP).
Ghosh had earlier explained that “simplified pricing” means one fare, inclusive of all taxes and other charges, an easy-to-navigate website etc. “One of every two of our customers is an infrequent flier and many are first-time fliers. It is important for us to simplify flying for them. So we want to keep flying simple. We have features such as queue busters at most airports, where if you are carrying only cabin luggage, you need not stand in a check-in queue and these queue busters would print boarding cards from hand-held machines quickly,” Ghosh had said.
Then, IndiGo claims to have the highest Technical Dispatch Reliability which, loosely translated, means its aircraft are rarely missing from action on account of technical faults. “TDR for us since our launch has been 99.91 percent, a world beating statistic for any Airbus carrier anywhere in the world.”
So is IndiGo not affected by the steep increase in fuel costs, airport charges and other expenses which are almost killing other airlines? It has launched over 60 new flights since January this year and plans to continue network expansion.
A report in Business Standard late last month noted that IndiGo is an anomaly in the Indian market, being the only profitable domestic airline this financial year (ending 31 March 2012). The carrier is, however, like its peers, feeling the pressure in a tough operating environment and Ghosh told the paper that the airline would see a decline in FY2012 profits, with the results substantially impacted by high fuel costs.
"Margins were under huge pressure because average price of fuel is now higher than what it was in 2009. There has been a growth in revenue and we will turn out to be profitable at end of the year. It will be a much smaller profit than we have done in the previous year,'' he said to the newspaper. The carrier reported an 18 percent increase in profit to Rs 650 crore ($130 million) in FY2011 but expects the FY2012 result to be a "fraction" of this figure.
The Indian aviation industry has reported Rs 26,000 crore of (US$ 5.1 billion) of operational losses in the 2007-2010 period, with a Rs 10,000 crore (US$2.0 billion) loss anticipated in 2011-12, according to a report by the Centre for Asia Pacific Aviation (CAPA). The spiralling cost of aviation turbine fuel (ATF), the global economic slowdown and low yields due to intense competition and the consequent widening gap between revenue and expenses have contributed greatly to losses.
IndiGo has apparently managed to keep its head above water even in this difficult environment.
IndiGo operates 56 Airbus A320 aircraft, offering 347 daily domestic flights across 32 destinations. It also flies international from Delhi to Muscat and Kathmandu, Dubai, Singapore and Bangkok as well as Mumbai to Bangkok and Dubai.