Quick Case HBP No.

7955

IndiGo’s Competitors Fly In

The Scenario
“Tata Group, owners of Air India, operators of full-service carrier Vistara and LCC AirAsia, ordered 470
aircraft in February 2023.” 1

Arjun Nanda, the CEO of India Equity Fund, worriedly read and re-read this headline. His phone buzzed—
it was Mark Young, his London partner.

“Arjun, can we talk about the Tata purchase and its impact on IndiGo? How much of our holdings are in
IndiGo? What should we do?”

Arjun also worried about a new player, Akasa. It started during the pandemic and had extremely low costs.
It was tiny compared to IndiGo, but Arjun wondered how well it would compete against IndiGo as it grew.

The Company
Overview
In 2023, IndiGo is India’s largest airline and the fastest-growing airline globally. 2 With 316 aircraft, it has
operated over 1,900 daily flights across 78 domestic and 26 international locations, with 63.2% domestic
market share. In the quarter ending June 2023, it had flown 26.2 million passengers.3 IndiGo’s recent
order of 500 Airbus aircraft at the 2023 Paris Airshow made it Airbus’s largest customer.4

From its founding, IndiGo focused on achieving the lowest cost-per-available-seat-kilometer (CASK). It
had gates at all the major airports in India, high aircraft-to-destination ratios, and stable flight schedules.5 It
also used a point-to-point network that emphasized shorter flights.

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IndiGo’s Competitors Fly In HBR Quick Case

Operations
With an average aircraft age of 3.6 years, IndiGo had the youngest, most fuel-efficient fleet in India;
typically, fuel accounted for over half of an airline’s operational costs. IndiGo used ground power units to
convert diesel into electricity for planes at the boarding gates instead of using auxiliary power, since diesel
was cheaper. It trained pilots to fly to save fuel and introduced sharklets (curved wingtip extensions) to
India to reduce fuel consumption. It used single-engine taxiing, electric ground vehicles, and on-board
water conservation. 6 It even replaced its in-flight magazine with a lighter catalogue of food and duty-free
items.

IndiGo flew each of its aircraft an average of 16 hours a day, the highest utilization in the industry. Its
passenger loads averaged 90%. It had faster aircraft turnaround times, with crews who started cleaning
the cabin before the plane landed. It also asked departing passengers to close window blinds to cool
planes more quickly. 7

IndiGo used data links between its satellites, planes, and ground stations to streamline operations control,
reservations, and dispatch. 8 These links kept flight cancellations (0.2% globally) to a minimum. Its on-time
performance of 89.2% led the industry. 9

As it grew, IndiGo continued to focus on reducing costs. It had shifted plane maintenance from Europe to
Sri Lanka in 2014 and planned to begin servicing them in India by late 2023 to save on service and fuel
costs. With maintenance and spare parts accounting for 10% of operational costs, IndiGo’s "power by
hour" vendor agreements charged IndiGo for every hour the aircraft flew. Vendors provided spares and
engines, saving inventory costs and preventing aircraft grounding.10

Sales and Marketing

IndiGo had become a part of InterGlobe’s ecosystem, which had seven verticals: airlines; hotels in India;
international hotels; a travel agency management unit; car rentals; and pilot training and aircraft
maintenance; along with iFly, among the largest aviation training academies worldwide. 12

Rapid growth brought challenges. There was unrest with pilots, cabin crew, and technicians, who resorted
to working slowly while demanding the removal of COVID-19 pay cuts, which were implemented when
performance suffered. Customer service suffered public scrutiny when a child with special needs was not
allowed to board. And in 2017, ground personnel at Delhi airport were terminated for assault.13 Some
wondered whether IndiGo had slashed costs too much.

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IndiGo’s Competitors Fly In HBR Quick Case

Fast Facts: IndiGo

• Industry: Aviation

• Founded: August 2006

• Headquarters: Gurugram, India

• Products: Airlines

• Revenue: INR ₹544.46 billion (2023)

• Key people: Rahul Bhatia, Managing Director; Peter Elbers, CEO; Wolfgang Prock-Schauer,
President & COO. 14

The Ask
1. Why has IndiGo succeeded?

2. What should Arjun do with his fund’s holdings in IndiGo?

——————————————————

1
Aditi Shah, “Air India firms up order with Airbus, Boeing for 470 planes,” Reuters, June 20, 2023.
https://www.reuters.com/business/aerospace-defense/air-india-firms-up-order-with-airbus-boeing-470-planes-2023-06-
20/#:~:text=NEW%20DELHI%2C%20June%2020%20(Reuters,turnaround%20under%20its%20new%20owners. Accessed October 18,
2023.
2
IndiGo, “Leadership Team.” https://www.goindigo.in/about-us/leadership-team.html. Accessed October 18, 2023.
3
Justin Surette, “17 Years Of Operations: Everything You Need To Know About IndiGo,” Simple Flying, August 4, 2023.
https://simpleflying.com/indigo-complete-
guide/#:~:text=By%20both%20numbers%20of%20passengers,cities%20and%2025%20international%20destinations. Accessed October
18, 2023.
4
IndiGo, “About Us.” https://www.goIndiGo.in/about-us.html. Accessed October 18, 2023.
5
Sukalp Sharma, “IndiGo’s mega aircraft order: What it means for the carrier and India’s aviation sector,” Indian Express, June 21, 2023.
https://indianexpress.com/article/explained/explained-economics/indigo-aircraft-order-india-aviation-sector-significance-8674415/. Accessed
October 18, 2023.

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IndiGo’s Competitors Fly In HBR Quick Case

6
Manish Pant, “Can IndiGo's new CEO keep India's leading airline ahead of its rivals?” Business Today Magazine, October 30, 2022.
https://www.businesstoday.in/magazine/corporate/story/can-IndiGos-new-ceo-keep-indias-leading-airline-ahead-of-its-rivals-350093-2022-
10-17. Accessed October 18, 2023.
7
IndiGo, “ESG Report 2022-23,” 2023. https://www.goindigo.in/content/dam/indigov2/6e-website/header/information/indigo-
green/download-report/ESG_Report_2022-23_16-08-2023.pdf. Accessed October 18, 2023.
8
IndiGo, “About Us.” https://www.goindigo.in/about-us.html. Accessed October 18, 2023.
9
Gerry Yemen and Elliott Weiss, “Case in Point: No-frills IndiGo airlines stays focused on its low-cost, on-time mission,” The Washington
Post, May 30, 2014. https://www.washingtonpost.com/business/case-in-point-no-frills-IndiGo-airlines-stays-focused-on-its-low-cost-on-time-
mission/2014/05/29/fd59806c-e5b9-11e3-8f90-73e071f3d637_story.html. Accessed October 18, 2023.
10
IndiGo, “About Us.” https://www.goindigo.in/about-us.html. Accessed October 18, 2023.
11
IndiGo, “ESG Report 2022-23,” 2023. https://www.goindigo.in/content/dam/indigov2/6e-website/header/information/indigo-
green/download-report/ESG_Report_2022-23_16-08-2023.pdf. Accessed October 18, 2023.
12
IndiGo, “About Us.” https://www.goindigo.in/about-us.html. Accessed October 18, 2023.
13 Saurabh Sinha, “IndiGo staff manhandle passenger, airline apologises,” Times of India, November 8, 2017.
https://timesofindia.indiatimes.com/india/indigo-staff-manhandle-passenger-airline-apologises/articleshow/61549684.cms. Accessed
October 18, 2023.
14
IndiGo, “Leadership Team.” https://www.goindigo.in/about-us/leadership-team.html. Accessed October 18, 2023.

This Quick Case was prepared by Professor Rajiv Agarwal of S.P. Jain Institute of Management and Research. HBR Quick Cases
are developed solely as the basis for class discussion. They are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management. This publication may not be digitized, photocopied, or otherwise reproduced,
posted, or transmitted without the permission of Harvard Business Publishing. Although based on real industries and despite
occasional reference to actual companies, this Quick Case is fictitious and any resemblance to actual persons or entities is
coincidental.

Copyright © 2023 Harvard Business School Publishing Corporation. All rights reserved.

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