It's not all doom and gloom for India's embattled airline sector. IndiGo, a low-fare carrier launched in 2006, has climbed to second place in market share at the expense of Air India and Kingfisher Airlines and is the only one of India's six main carriers making a profit, for now at least.
While Kingfisher and market-leading Jet Airways have bought rivals, fly multiple plane models and have struggled to mix full-service and low-fare options, IndiGo offers one class of no-frills service on a single type of plane, the same strategy pioneered by US-based Southwest Airlines.
IndiGo also sells and leases back its planes, sparing its balance sheet and allowing itself to maintain a young fleet. "Indigo has done everything right which Kingfisher has done wrong," said Rajan Mehra, executive director at the Asia Pacific Academy for Aviation and Hospitality.
Industry watchers say there is no great secret to IndiGo's success, which they attribute to rigid adherence to a disciplined business plan, a task that grows more complex as the 50-plane airline adds a new plane every month. Still, IndiGo is not immune to the industry's myriad headaches that include fierce competition, a weak rupee, high taxes, rising airport fees and the high cost of oil.
Airfares are low in India, where carriers compete with trains and buses for passengers. A one-way ticket for April 18 from Mumbai to Delhi, a distance of about 720 miles, starts at around 3,935 rupees ($79.50) on IndiGo, GoAir or Jet's JetLite subsidiary, according to a popular travel website. IndiGo's rise mirrors that of Jet Airways in the 1990s, before it became a sprawling international carrier that has lost money in the last four quarters.
IndiGo has 21 percent of the domestic market, behind the combined low-cost and premium operations of Jet Airways, but up from its 17 percent share at the end of 2010. IndiGo said in January it offered clarifications to the regulator and that its expansion plans were intact. IndiGo says it earned 6.5 billion rupees ($131 million) in the fiscal year that ended last March, a result that Kingfisher's Mallya has questioned.
Comments
Comments are closed.