Updated: May 17
Recently IndiGo crossed the 300-fleet size mark. This is significant since no Indian carrier has ever achieved a triple century.
Pic credit: IndiGo Social Media Post So a few days back I was asked if one of IndiGo’s success mantra is its large fleet order. My response was - a large fleet is not most important to me; what you do with that fleet is. Among several accomplishments - sale & leaseback, simplified offering, low unit cost, hawk-eye focus on OTP, etc - to IndiGo’s credit, its network strategy is remarkably under-appreciated. Let me share my opinion. I do understand that some of my readers are aviation experts who may like to see more apt measures for capacity such as ASKM/ASM included in the analysis, however, I have taken the liberty of keeping it simple in the interest of many passionate aviation lovers who may not be as familiar with industry jargons. So, hope you will bear with me. Luckily, simple measures such as the number of flights amply do justice to the analysis since we are only considering domestic operations in India with the majority of operations on similar/comparable aircraft size, seat density, and stage lengths. While I have taken every effort to highlight the points which I wanted to make backed by data, I am mindful that this analysis does not represent a comprehensive and decisive reading of the subject considering the limitations of publicly available data as well as individual interpretations and inferences. With this disclaimer off my back, let us move forward. Here are my top 3 takeaways from IndiGo’s network strategy – 1. Expansion is fancy (and risky); Growth is smart (and sustainable) For anyone who follows Indian aviation, it is well known that IndiGo rapidly added capacity after its start in 2006 and established itself as the capacity leader by the winter schedule of 2014 (W’14**).
Even though IndiGo added significant flight capacity, it did not make an effort to exceed or even match the number of stations/airports operated by the competition. All three major Indian carriers – Air India, Jet Airways and, Kingfisher Airlines - during the mid-2000s were operating more than 50 domestic stations. Even SpiceJet added several new stations to its network during 2010 – 2013 and comfortably outpaced IndiGo in terms of stations. Perhaps the popular move was: Be everywhere possible.
So, what was the result of this rather conservative approach of IndiGo? By 2010 (within four years of its inception), IndiGo achieved the highest number of departures per station in the industry.
High departure per station ratio delivers: · Savings related to (not) starting new stations; · Less staff to be hired; · Less operating cost; · Economies of scale benefits related to higher productivity of resources (people & material) Now if IndiGo did not focus on new stations, what did they focus on? Market ownership. How? Take a look. Strategy Punch 1: Every time IndiGo launched a new station, say Bhopal, it would ensure that it starts flights from Bhopal to at least 2-3 airports that it already serves. For example, it would start flights from Bhopal to Delhi, Bhopal to Mumbai, and Bhopal to Hyderabad. If during the planning stage, it was concluded that the new station being evaluated cannot be connected with minimum of 3 existing stations in the near term, it would not start the new station at all! Don’t believe me ? See for yourselves.
Higher routes per station ratio delivers: · Cost savings as explained above; · But more importantly the airline can offer the city residents services to multiple destinations that they would like to fly to Strategy Punch 2: Not opening too many stations allowed the airline to deploy additional capacity on routes it had started in the past thereby resulting in higher frequency. In simple terms, frequency is how many flights are offered on a route per day/week. As a result, IndiGo was able to match the market leader, Jet Airways, (by frequency per route) by W’12. Points to ponder: · In W’12, IndiGo was 6 only years old. Jet Airways was 19. · In W’12, IndiGo had only 16% capacity share as compared to 31% of Jet Airways
Why is the frequency per route important: Having multiple flights during the day allows the airline to: · Capture demand at different times of the day · Be flexible with adjusting prices if needed · Compete as a main player than a fringe one · Most importantly, target the lucrative corporate traveller Speaking of the corporate travellers, as many of you are, let me share another brilliant move. · Most important traveller segment in India: Corporate; · Most important routes category in India: Metro – Metro (only 15 routes account for ~30% of India’s market size) Taking the flight to the bastion of Full Service Carriers (FSCs) IndiGo focussed on the Metro-Metro routes and towered above everyone else to provide the product that the corporates wanted.
While frequency is an important product feature required by the corporates, IndiGo fulfilled other expectations also neatly – On-Time Performance, day return flights, set meal, priority seat selection, and the like. Well, let’s not digress. Some other day. 2. Look Before You Leap! To ascertain the quality of airlines’ planning, let us review the data (WS'07-13) below: · Air India launched 43 new routes and closed 14 of them · Jet Airways launched 42 closed 11 · SpiceJet launched 70 closed 11 · IndiGo launched 49 closed 1 Need I say more? 3. Who dares wins! Strategically Opportunistic: The early bird catches the worm. To explain the context, let me bring up chart 6 once again with a small addition.
While IndiGo has generally moved on a smooth growth trajectory throughout its existence, there are two clear instances that have been used to propel faster. During 2011/12 and 2014/15 IndiGo moved quickly to fill the capacity void left by other airlines facing challenges. Even if it meant capacity rejig from other airports or taking short-term leased aircraft (usually more expensive). My assertion is not that IndiGo was the only airline that was quick to move, but it seems to have been the most successful at it. More recently, in 2022 IndiGo expressed its intentions to wet lease B777 aircraft and operate them to Istanbul, Turkey. The airline has recently received necessary approvals from the Government of India. While it is quite unusual for a traditional LCC to operate a large wide-body aircraft, in the post covid market conditions, there seems to be a lot of sound logic behind this move. Key perceived benefits are: · Access to Turkish Airline’s network beyond Istanbul; · Familiarisation with wide-body operations; · Freeing up smaller aircraft which currently operate on the route; Strategically Flexible: While it has made small adjustments to its product and offerings from time to time, IndiGo has more or less hugged the core LCC model since its inception. In fact, some would call it “boringly consistent” and this has worked to its advantage. However, from a network strategy point of view, IndiGo surprised the Pundits in 2017 by placing an order for 50 ATR turboprop aircraft. This was a massive departure from the core LCC model since traditionally LCCs like to have a single type of aircraft to avoid operational complexities and cost escalation. It is important to note that in 2016, the Government of India launched the Regional Connectivity Scheme (RCS) and also announced its intention to develop numerous small airports in India. I am sure, this only reinforced IndiGo’s thought process to capture the Indian hinterland with a regional aircraft. Today, IndiGo’s regional routes not only connect India’s tier II and III cities, feed traffic to its major domestic and international routes, but also are a significant part of the RCS scheme.