Return to Previous Page

Indigo Airlines: Market Leadership through Service Leadership

CASE STUDY, MARKETING MANAGEMENT
ET Cases, 19 pages

Case Preview

IndiGo Airlines: Market Leadership through Service Leadership

 

“The idea for us was to set up a certain kind of an airline… the kind that is ontime, clean and delivery is well executed. This is our DNA and we intend to hang on to it.”1

– Rahul Bhatia, Co-Founder, Indigo Airlines

 

“Airlines must remember that their fundamental raison d’être is to take off and land on time. This is perhaps the big difference that drew me to choose Indigo (Airlines) in the first place.”2

– Abhijit Bhaduri, Chief Learning Officer (as of October 2012), Wipro Group


IndiGo airlines commenced its flight services in 2006 and since its inception it was a no-frills airline. It did not offer entertainment on-board and passengers had to pay for meals on-board. Furthermore, the carrier did not offer any frequent flier or loyalty programs for its customers. However, the airline became the market leader in the Indian domestic aviation industry in July 2012 and in April 2014 its market share had gone up to a formidable 31.6%.3 What was more outstanding was that during a time when most airlines were incurring losses and a reputed airline shut its operations, IndiGo registered profits for each of the financial years from 2009 to 2013. Could IndiGo’s dominant market position be attributed to its unwavering adherence to the three aspects of its flight services: the on-time performance of its flights, ensuring that its planes were neat and clean and the service on board was efficient? However, with the entry of Air Asia, a true-blooded low-cost carrier, and the imminent launch of flight services by Tata-SIA Airlines, a collaboration between Tata Sons and Singapore Airlines, will IndiGo be able to retain its market leadership status?

The Origins

IndiGo was operated by InterGlobe Aviation, a company established in 2005, which was equally owned by Rahul Bhatia (Bhatia) and Rakesh Gangwal (Gangwal). Gangwal, an engineering graduate from IIT Kanpur, had considerable experience in the aviation industry and had also served as the President and CEO of US Airways. Bhatia was the Managing Director of InterGlobe Enterprises, a group with a turnover of $2 billion as of 2010. It had interests in the hospitality, airline and travel technology sectors. Bhatia and Gangwal had met professionally, a liaison which blossomed into a friendship lasting more than 15 years prior to the airline venture being contemplated.4

...........................................




  • 1 Cuckoo Paul, “How Rahul Bhatia Found IndiGo Gold,” http://www.forbes.com/2010/11/03/forbes-india-how-rahul-bhatia-foundindigo-gold.html, November 3rd 2010
  • 2 Abhijit Bhaduri, “Six Years Old and Still 6E”, http://blogs.timesofindia.indiatimes.com/just-like-that/six-years-old-and-still-6e/, October 19th 2012
  • 3 Tarun Shukla, “IndiGo Corners 32% of Domestic Market”, http://www.livemint.com/Companies/99OZkB4lJq7RXkiLHExg8K/IndiGo-corners-32-of-domestic-market-widens-lead-over-Jet.html, May 20th 2014
  • 4 Cuckoo Paul, “How Rahul Bhatia Found His Escape Velocity”, http://forbesindia.com/article/work-in-progress/how-rahul-bhatiafound-his-escape-velocity/18582/3, October 27th 2010

Teaching Note Preview

IndiGo Airlines: Market Leadership through Service Leadership

 

Synopsis

This case study enables a discussion on how services can be designed and managed to attain market leadership. IndiGo Airlines, which commenced its flight services in 2006, did not offer free food onboard or entertainment on-board, unlike full-service carriers. However, it focused on the efficient delivery of certain services or experiences that it believed mattered most to its customers, a strategy that resulted in it becoming a market leader.

Since the start of its flight services, IndiGo ensured that its aircrafts took off and arrived in time, that its aircrafts were neat and clean and that its cabin crew on board provided good service. This gradually resulted in several loyal customers of other airlines shift allegiance to IndiGo as they found it to be reliable. This was despite the airline not offering any loyalty or frequent flier programs. An important reason for IndiGo’s efficient service delivery was its human resources practices which ensured that its employees were properly trained and were given regular salary hikes and promotions. Another key factor was the proactive deployment of technology by the airline. The airline also ensured that it did not compromise on its profitability while usurping a greater share of the market. This resulted from it being prudent in fuel consumption and from adopting the strategy of acquiring aircrafts and immediately selling them to lessors at a premium. IndiGo’s profits were particularly conspicuous given the losses being incurred by most of its competitors and the huge debts that they had piled up. However, with the entry of Air Asia, a true-blooded low cost carrier, and the imminent launch of flight services by Tata-SIA Airlines, a collaboration between Tata Sons and Singapore Airlines, will IndiGo be able to retain its market leadership status?

Prerequisite Conceptual Understanding (PCU)/ Before the Classroom Discussion

This case study presupposes an understanding of the concept of services’ design and management. This would enable an effective discussion leading to practical solutions. The participants were asked to read the following to help them better connect the concepts:

  • • Philip Kotler, et al., “Chapter 12: “Designing and Managing Services”, Marketing Management, 14th Edition, Pearson Education, 2013 – To understand the concepts of customer empowerment, customer coproduction with specific regard to the incorporation of technology to help employees and customers, employee satisfaction, interactive marketing, best practices of top service companies with specific regard to strategic concept, primary and secondary service options and the five determinants of service quality
  • • James L. Heskett, et al., “Putting the Service-Profit Chain to Work”, Harvard Business Review, July 2008 – To understand how a service-focused business should align its organisational resources to deliver better business results

 

Expected Learning Outcomes

  • • How IndiGo became the market leader by fulfilling the five determinants of service quality
  • • How technology can be employed to deliver superior customer service
  • • What are some of the important determinants of employee satisfaction and how does employee satisfaction result in superior customer service?

 

Positioning/Case Setting

This case study can be used in the following course/module:

  • • Introductory Marketing Management Course – Designing and Managing Services Module (as outlined under PCU) –To understand how the identification of the customer requirements and the appropriate delivery of the concerned services can help companies to increase their business

 

Assignment Questions

  • I. Analyze IndiGo’s performance on the following parameters:
  • a. Internal business operations
  • b. External business operations
  • II. How did IndiGo bring about synergies in its internal business operations and external business operations?
  • III. Based on the case facts, what do you think have been the critical success factors of Indigo’s better performance over the years?
  • IV. ..............

 

Case Analysis

The classroom discussion and analysis for this case study could be summarized through the Board Plan [Exhibit (TN)-I]. However, the classroom discussion was facilitated under three broad sections as explained below:................

$4.57
Rs 0
Product code: MKTG-1-0033, MKTG-1-0033A

Abstract


This case study enables a discussion on how services can be designed and delivered to gain market leadership. IndiGo, a late entrant into the Indian aviation industry - operated its first flight in 2006 - became the market leader in 2012 and had a market share of 31.6 % in April 2014. IndiGo gained market share primarily on account of its stellar record of on-time performance of its flights and the efficient service of its ground staff and cabin crew. How did IndiGo design its service to ensure that it was considered reliable in terms of on-time performance? What were some of the other services provided by IndiGo that enabled its customers to have a hassle-free experience? What were the human resources practices that the airline followed for its internal customers to buy into its vision of providing consistent service? What were the other strategies followed by the airline that added to its bottom line and hence made its service delivery sustainable and market leadership possible? What would it take to sustain market leadership in the face of intense competition?



Pedagogical Objectives

  • To discuss the acclaimed customer service strategies adopted by IndiGo to become the market leader in the Indian aviation industry
  • To examine the relationship between market leadership and service leadership and analyse the differentiating factors given the same business environment to all the players in the industry
  • To understand how IndiGo built a loyal customer base despite not offering loyalty or frequent flier programs



This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
$4.57
Rs 0

Related products




Request for an Inspection Copy

(Strictly for Review Purpose, Not to be Used for Classroom Discussion/Trainings)