Indigo Airlines- Meandering through the Public Policies on the Success Runway – Can it Fly Higher?
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Case Code: BSTR507 Case Length: 14 Pages Period: 2015 - 16 Pub Date: 2017 Teaching Note: Available |
Price: Rs.400 Organization : Indigo Airlines Industry :Civil Aviation Countries : India Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Entry of Indigo
In 2006, the government had planned to erect a host of checks to act as barriers to entry for airlines in order to allow only financially viable air ventures to take off. That was the time Indigo stepped into the market. The then civil aviation minister, Praful Patel, said in 2006, “We do not intend to clamp down or impose a blanket ban on issuance of fresh licences to airline companies, but we also want to ensure that the airline industry does not turn sick and so, a thorough check of their financials and business plans would be conducted before fresh licences are issued.” He also stated, “No longer would airline companies be granted licences and allowed to firm up their business plans, as from now, airline companies will have to first firm up their business strategy and do the recruitments, and then seek a license because this will ensure that only serious players with sound financials will enter the market.” Bhatia was in a relatively good position to table an acceptable financial figure and the government give him the green signal. This was just the beginning of the policy changes being introduced....
Indigo Sailing through the Odyssey of Public Policy
An airline providing scheduled services on domestic routes in India was required to comply with Route Dispersal Guidelines as formulated by the Government in March 1994. As per these guidelines, it was mandatory for all airlines to travel on Category I and II routes. This policy implied redistribution of aircraft from the routes where a potential demand gap existed and diverting them to those routes which had scarce demand...
Flying High Despite Changed Government Policies
The year 2013 took the aviation sector by surprise with the profitability of Indigo and the simultaneous news of the collaborations of other Indian airlines with foreign airlines on account of the FDI being allowed in the aviation sector......
Road Ahead
On January 8, 2015, Qatar Airways Group Chief Executive Officer Akbar Al Baker told reporters, “If Indigo offers us 49 per cent, Qatar Airways would be extremely interested, Qatar Airways will always have a very keen interest in growing in India and investing in the aviation industry in India.”.....
Exhibits
Exhibit I: Market Share of Indigo in February 2015
Exhibit II: Fleet Acquistions by Indigo
Exhibit III:Business model of a low cost carrier
Exhibit IV: Growing Market Share of Low Cost Carriers
Exhibit V: Route Dispersal Guidelines
Exhibit VI : Total ATF charge (ATF+Sales Tax on Fuel)
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