1. STRATEGY EXECUTION PLAN: INDIGO AIRLINES
1.1 IndiGo Airlines is a focused Low Cost Carrier in the Indian domestic
schedule air transport segment. It operates from the national capital Delhi and
its tag line says “low fares, on-time flights and a hassle-free experience” for
passengers. It commenced operations in August 2006 with a single aircraft, and
has grown their fleet to 109 aircraft. They have a relatively young fleet and the
average age of their aircraft is 4.6 years as on Jun 2016. IndiGo has:
a. A single aircraft type
b. A high operational reliability
c. An award-winning service
1.2 It was formed by collaboration of two main promoters, who had much
exposure of Low cost airline operation and also seen bankruptcy of some LCCs
up close in the USA. Mr. Rahul Bhatia is the Promoter and Non-Executive
Director of the Company. Mr. Rakesh Gangwal, a citizen of the United States
of America is the second Promoter and also a Non-Executive Director on the
company Board. He holds a master’s degree in business administration from the
Wharton School, University of Pennsylvania, with a major in finance. He has
more than 30 years of experience in the aviation industry. Mr. Rakesh Gangwal
joined United Airlines in February 1984 where he held positions of various
responsibilities before leaving as Senior Vice President - Planning in November
1994. Mr. Gangwal then joined Air France as an Executive Vice President -
Planning and Development in November 1994. He left Air France in February
1996 to join the US Airways Group, Inc. and US Airways Inc. as the President
and Chief Operating Officer. In November 2001, he left the US Airways Group
as the President and Chief Executive Officer and was engaged in private equity
and consulting related activities.
2. 1.3 InterGlobe Enterprises Limited is the holding company of IndiGo Airlines.
Inter Globe Enterprises was incorporated as Inter Globe Enterprises Private
Limited on September 13, 1989 under the Indian Companies Act, 1956.
InterGlobe Enterprises is engaged in the business of inter-alia providing
services as tourist and travel agents, transport agents and IATA agents.
1.4 Indigo Airlines, is the largest domestic Low-cost Airline in India, with a
38.9% market share and 2.8 million passengers as on May-2015. Indigo
Airlines maintained its market share lead over other competitors in this
Fig. 1. Source: CAPA- centreforaviation.com
1.5 Present competitive position of indigo in the domestic Low Cost Carrier
segment in Indian civil transport Industry is poised for start of a major growth
phase and may capture 50 percent of domestic market share by 2018.Total
valuations of Indigo Airlines after the recent market listing has been $4
3. Competitors' analysis
1.6 Major competitors in this space are Jet Airways, Air India, Spice Jet, Go
Air, and few others with minimal market share. As world over airline
business is one with intense rivalry and competition, Indian scenario has also
witnessed intense price and differentiation competition. Jet Airways and Air
India are Full service carriers and operate in a different sub-segment of this
market i.e. full service operators. Nearest rivals are Spice Jet and Go Air
which are Low cost operators and operate in the same space as Indigo as
depicted in the Strategy Map. Nature of competition among LCC is based on
operational excellence and innovative cost cutting. Detailed Competitors
analysis data and strategy map depicting positions of various operators is as
shown in the appendix.
1.7 Jet Airways total domestic revenues are currently INR 2,167 crores, up
by 17.7% on year-on-year basis². Domestic operations in Jet Airways
achieved a load factor of 80.3%, an improvement of 8.4% points over last
year same quarter. ASKMs went up by 26.4% compared to Q1 of last year.
Etihad Airways is also a shareholder in Jet Airways, holding 24 % of total
equity. Etihad which handles bulk of the Indian traffic to the Gulf finds it
suitable to have an alliance with Jet Airways to fill in the local last mile
1.8 Air India has achieved the target set out in the Turn Around Plan (TAP),
and has made substantial progress in both operational as well as financial
areas. The main areas in which the company has registered improvements in
FY15 in comparison to fiscal 2013-14 include seat factor, network yield,
revenue from passengers and on-time performance on the operational side.
Since the implementation of TAP/ Financial Restructuring Plan (FRP), the
operating loss has reduced from INR 5,138.69 crore in the fiscal 2011-12 to
Rs 2,171.40 crore in the year ended March 31, 2015, and the net loss has
come down to Rs 5,547.47 crore in 2014-15 from Rs 7,559.74 crore in 2011-
12, the minister said.
1.9 Spice Jet reported a net profit of Rs 23.77 crore in the three months
ended September15 driven by a steep fall in fuel costs and other expenses.
4. The no-frills carrier, which saw the return of its original promoter Ajay Singh
at the helm earlier this year, had a net loss of Rs 310.45 crore in 2014
September quarter. The airline has flown into the black despite its total
income from operations declining over 28 percent to Rs 1,040.13 crore in
July-September of the current fiscal. In year-ago period, the same stood at Rs
1,449.94 crore. Spice Jet benefited from over a 57 percent drop in jet fuel bill.
The airline recorded a load factor of 92.8 percent for the quarter, the highest
in the industry," the release said. In line with year-on-year capacity reduction
of 34 percent that was driven by a smaller fleet in late 2014.
Firm Capability Analysis
1.10 Indigo Airlines, is the largest domestic Low-cost Airline in India, with a
38.9% market share and 2.8 million passengers as on May-2015. Indigo
Airlines maintained its market share lead over other competitors in this
industry. IndiGo is expected to take deliveries of Airbus neo aircraft
beginning 2016 (till 2020).this will take the total tally to the total of 250
aircraft. Presently the order book is closed for fresh orders by the
manufacturers. The competitors of IndiGo will be in a disadvantageous
position as they will not be able to scale up operations soon. With such a
rapid increase in capacity, the airline may give tough competition to other
LCC operators from next calendar year onwards. These aircrafts are highly
fuel efficient and may result in 10 to 15 % savings in fuel cost.
1.11 According to a recent report by global aviation consultancy CAPA,
IndiGo could grab up to 50 percent share in just two more years and 40
percent this fiscal itself. As India's domestic aviation grows on the back of
low fuel prices and increasing demand, IndiGo seems poised to reap
maximum benefits among all Indian carriers, which the airline has been
preparing (market dominance) for a long time. It is clear that indiGo itself
sees a huge potential in the Indian aviation market and is trying to out-
maneuver competitors by aggressive capacity expansion. As of now, the
airline has a fleet of 109 operational aircraft and offers over 600 daily flights
connecting 38 destinations. It went public and garnered up to $400 million,
by selling 25 percent equity, in Indian markets recently.
5. 1.12 Strength of Indigo lies in achieving operational excellence at minimum
cost and performing consistently better than the Industry benchmarks like On
Time Performance and Employee Productivity etc. High achievement in
performance metrics has enabled Indigo to maintain high brand equity and
customer loyalty. It has enabled Indigo to maintain stable price and rarely
offer tickets at heavy discounts. Indigo for last three years, never offered
tickets, at flash sale. In addition to operational excellence Indigo has a sound
strategic business approach. During the global recession period 2011-12,
when there was dearth of orders for Aircraft manufacturers, Indigo ordered
250 Airbus 320 Neo at a very attractive price. Starting next fiscal deliveries
will start and Indigo will be able to increase capacity at a less cost compared
to its competitors. Interestingly, now the situation has changed and Airbus
320 Neos are not available against fresh order till 2017-18.
2. Strategy formulation
Having carried out strategic analysis and environment analysis of IndiGo
Airlines, which is a cost leader in LCC segment in Indian schedule carrier
industry, next step is to follow appropriate strategy formulation approach. It is
felt that an integrated approach may suit this scenario. It is recommended that
War room and Rapid Prototyping approach should be used simultaneously.
2.1 War room is a separate room designated in the organisation meant for
visual representation of issues and strategic options available to the firm. In
addition to various strategic options, individual tradeoffs and specific
highpoints of each option can also be represented. This facility can be used in
many situations like strategy formulation as well as tactical problem solving
which involves many variables and is complex in nature. Whenever there are
many stake holders involved in problem solving it is a good practice to meet up
at the war room and work out a better solution.
2.2 It is proposed to organise war room in three areas.
a) First area consisting of story board visualization of IndiGo Airline
covering functional areas of critical importance. It should start with a
6. happy and satisfied customer in the last and work backwards depicting
various strategic possibilities.
b) Second area depicting strategic options to manifest stated mission and
vision, also spell measurable outcomes like market share and other KPIs.
c) Third area is proposed to depict perceived pro and cons (analysis) of each
Story board depictions for Indigo Airlines, its operations and business
environment is as shown in the Annexure-I, Few slides depicting possible
strategic options is shown in Annexure-II. The mission and vision statement of
IndiGo Airlines states Low fares, on time Performance and Hassle free travel.
This mission is quite elaborate and covers full ambit of any airline operations. If
we see clearly this mission aims at excellence in overall operation, offering
differentiation only in priority. It is inferred that first priority of management
should be low fares. The second priority is declared as on time performance and
comforts of travel are targeted at the third priority. In short this mission
statement is fact a prioritization of full ambit of any successful airline.
Rapid Prototyping approach Airline industry is essentially a service industry
and very conducive to try Rapid Prototyping approach in some destinations or
some segments. IndiGo can try finalized strategy in some geographical areas to
check its performance before that strategy is rolled out across entire market.
a) It is proposed to achieve and sustain, lowest operating cost in the market
and aim to be cost leader in LCC segment in domestic carrier market in
b) Aim to be in top two, on time performance leaders in domestic operations
as published by DGCA on annual basis.
c) Aim to sustain, among top two positions in customer satisfaction index,
published by DGCA.
7. 2.31 In order to be a cost leader IndiGo would have to control the major cost
elements in its operations. The top 3 Costs for any Airlines are:
Approaches for Success include Effective cost cutting strategies, Fleet
commonality, Long-term vision and reasonable capital costs. In order to
effectively operationalized cost leader strategy it is desirable to target all three
constituents of cost function of operations group without hurting efficiency or
performance. In order to formulate the larger strategy of achieving Cost
Leadership, it is recommended to break down the larger strategy into few sub
a) Fuel hedging: Fuel is one of the largest operating costs of airlines.
When airlines believe that the fuel price won’t drop in the future, they
can sign a contract to buy for a period of time at the current price. In the
future, if the fuel price increase, they get benefit, in contrast they paid the
higher fuel prices. Most Airlines use fuel hedging to regulate and
stabilize their operating costs for planning purposes.
b) More seats: The LCCs can sell seats at cheaper fare, and they can also
increase revenue by arranging more passengers on the plane. For
example, an LCC can go in for Boeing B737-400 aircraft configuration to
accommodate 168 passengers, while other full service carrier retains the
configuration at 144 or 150 passengers.
c) Labour and maintenance cost analysis should be conducted at a
professional level and by using latest data analytics. Decision to conduct
maintenance by own staff and hire full time labour for sundry jobs,
should be subjected to criterion test periodically to validate the
continuation of practice. If it is profitable to enter into alliance for any of
the above mentioned services, local managers should be encouraged to
decide for their zones and go for contracting or self work based on
2.32 In order to achieve on time performance it is essential to identify the
constituents of this KPI and take effective steps to actively manage each one of
them. Once identified, each parameter is to be owned by some designated
manager and its outcome is to be controlled by an effective mechanism of
incentives (if targets met) and explanations (if not met).Purpose of analysis is
8. not to de incentivize concerned manager, but to examine reasons and take
effective steps to avoid recurrence.
Approaches for Success include steady and moderate growth strategies,
incentives for managers achieving on time performance in their area of
responsibility and removal of impediments for desired performance. Efforts
should be made to analyse any failures / repetitive issues and their speedy
remedies. A flexible system for use by regional managers to shift capacity will
significantly increase value-for-money opportunities and ensure on time
2.33 In order to achieve top two positions at the customer satisfaction index
we need to highlight its factors. Customer satisfaction is regarded as one of the
most indispensable elements playing a vital part in determining the success for
any Airlines. It is defined as an emotional or affective response which manifests
when meeting with any kind of service. After service is provided, a positive or
negative reaction will emerge from customers getting that service.
Perceived Service Quality is evaluated thoroughly by the actual performance
of one service rather than the expected performance in a specific context.
Higher level of service quality will lead to higher level of customer satisfaction
thus service quality and customer satisfaction is intimately connected. service
quality could become an efficient tool to approach and achieve the highest level
of customer satisfaction.
On-Ground Services are among important factors affecting service quality that
cannot be ignored in aviation context. Ensuring and providing good on-ground
services can leave initially strong impression on passengers when they first get
to know about the airlines. These services consist of all the activities such as the
stage of gathering information about airports, airlines, flights; reservations and
ticket purchases; airport check-in process. Also, food and drink catering,
baggage handling, lounge services are some of the items that are included in on-
ground services as well.
Tangible Factors is “the appearance of physical facilities, equipment,
personnel, and communication materials”. In aviation industry, we can
associate tangibles factor with the appearance of staff and cabin crew, in-flight
facilities. In-flight facilities are comprised of seat comfort, cleanliness of
aircraft interiors, appearance of cabin crew, in-flight equipment like reading
9. lights, call buttons, air-conditioners, etc. and entertainment facilities like
newspapers, TV screens, video games, etc. Tangibles could also relate to the
quality of food and beverage served on board as well as seat comfort like seat
materials, pitch and size. These factors can play a fundamental role in forming
customers‟ perception of the general service quality.
Reliability is one of the most essential service quality dimensions in the air
service industry. It is the consistency of the service provided and doing it
accurately and dependably the first time.
Responsiveness is regarded as the Airlines’ readiness and willingness to
provide and deliver the effective and qualified performance to assist its
customers in any circumstances. In aviation context, “responsiveness” can be
regarded to flight attendants or ground employees‟ willingness to help
passengers. Also, it can refer to all the activities including prompt handling of
complaints, prompt service delivery, timely and efficient guidance to assist
passengers or quick response to their requests.
Assurance is one of the most important dimensions in having a significant
effect on customer satisfaction in the air service industry. Assurance that
“customer satisfaction is the outcome of the evaluative process between the
impression during or after service is the employee’s hospitality and kindness as
well as their ability to build trust and reliability in customers, such as
competence in performing the service, politeness and respect for the customer.
Empathy is the act of showing concerns and care towards customers‟ personal
matters; a real, sincere attitude and attention in solving their problems. This
dimension consists of all the characteristics such as thorough understanding,
dedication, sincerity, sensitivity, attentiveness towards customers‟ wants and
needs. Empathy helps firms to understand their customers deeper as well as
improving the overall service to assist customers in the future. Also, in any
context, showing empathy can bring people closer and narrow down the gap of
the relationship between them.
Safety Records For many passengers, delivering a good service through three
stages (pre-flight, on-flight and post-flight services) is an imperative condition
to reflect good flight experience. However, safety record is the factor which
10. should be put in first priority since it can exert a strong effect on the process of
customers‟ decision-making. Since there have been many air risks and
casualties caused due to weather conditions, flight crashes, terrorism and even
pilots‟ own mistakes been reported throughout the years, passengers tend to
highly evaluate the safety records of whichever airlines they opt for because life
security is the most important thing.
Brand Image is more and more acknowledged as being indispensable assets
that play an essential role in the marketing strategy. “Brand names tell the buyer
something about product quality” and customers when they purchase or use the
same brand of a particular product or service, they know about the quality of
that product and service they are about to receive. In the airlines industry, the
objective of the brand image is to gain a competitive advantage with the
purpose of separating its name, logo, symbol to become exceptional from a
diversity of tough opponents.
Approaches for Success Most of the factors mentioned above indicate towards
response shown by airline employee towards passengers. In most cases
employees can be trained to respond in a particular fashion when interacting
with passengers. Unfortunately not all interactions can be anticipated and even
the lowest employee could be the flag bearer of the company’s reputation at
times. This stipulates high moral and judgmental capabilities of employees at
unforeseen times and requires them to respond with compassion. The only
approach in this regard is to train extensively and reward positive behavior by
3. Strategy analysis
For analysis purpose the strategy of positioning as cost leader in LCC segment in
domestic carrier market in India is chosen. Under this principle strategy it is
proposed to analyse granular strategies as well. It is assumed that secondary
strategy of reducing fuel costs and lowering labour/maintenance costs are to be
11. 3.1 Framing of options: It is hypothesized that:
a) Fuel hedging for 75% of total fuel consumption and
b) Out sourcing maintenance and labour at 10 least profitable
will propel IndiGo Airlines to be the Cost leader in LCC segment in India.
3.2 Core assumptions: any assumption should be subjected to basic tests, for
checking their validity by using objective criterion. Core assumptions in these
strategic options are
i) Fuel hedging will result in substantial price stability and lesser fuel costs.
ii) Contracting out maintenance and labour at less profitable destinations will
result in streamlined operations and enhance profitability.
a) Value test. It is seen that fuel hedging to some varying degree is a common
practice by LCCs in India. Considering that crude prices are at historical low
value it is safely assumed that entering into long term hedged fuel contract
will surely offer great competitive advantage to IndiGo Airlines. Ten
destinations have been identified by carrying out ABC analysis of total
destinations of IndiGo and are at the bottom of performance chart. Out
sourcing operations at these destinations will certainly reduce cost of
operations. This strategy passes the value test.
b) Execution Test. It is observed that there are many professional Hedging
companies in India which offer services at very competitive price. Hedging
fuel contracts which many domestic and international Fuel companies offer
are of International standard and their execution is very feasible in India.
Indian legal framework supports elaborate contracts regarding outsourcing
and sharing manpower for sundry jobs, even by competing airlines. Most
airlines in India are already using such contracts. It is observed that
proposed hypothesis passes execution test as well.
c) Scalability Test. this hypothesis passes the scalability test as fuel hedging can
be scaled up or down on yearly basis. Nowadays fuel hedging contracts are
available on quarterly basis as well. Regarding scaling up of out sourcing
12. maintenance and other non core functions, situation is very conducive. We
can scale up any time and at any pace deemed fit. This strategy is scalable.
d) Defensible test. Fuel hedging and out sourcing in it are no innovations, but the
manner in which they are used and implemented could be a differentiation
for IndiGo Airlines. It is recommended that top notch consultants are hired
to finalize hedging contracts and performance should be reviewed
periodically. Regarding out sourcing non core activities at unsustainable
destination, operations analytics can be used to arrive at the best solution. If
confidentiality of techniques and tools used for analytics and selection and
evaluation criterion for continuation with the hedging contract firm is
maintained, then this strategy will be defensible.
3.3 Next Steps
It has been clearly observed after hypothesis testing that the assumptions of this
strategy are strong and valid. This strategy if followed and implemented correctly
will yield desired results. Immediate steps to be taken for IndiGo Airline
Management for implementation of this strategy includes following steps.
i) Finalize consultant for fuel hedging and revisit percentage of fuel to be
hedged. Fuel hedging percentage of other LCCs in Indian market and their
performance can be used as a benchmark.
ii) Enter into hedging contracts on monthly or quarterly basis slowly
scaling up or down the hedging level considering seasonality factor.
iii) Task IndiGo finance department to carry out ABC analysis of
maintenance costs and noncore labour costs at less profitable destinations.
iv) Prepare a list of 15 least profitable destinations.
v) Prepare alternatives after exhaustive analysis, at these destinations.
vi) Negotiate with other firms offering services at less than own cost.
vii) Finalize ten best deals and implement.
13. 3.4 List of sources:
iii) Jet Fuel Hedging Strategies: Options Available for Airlines and a
Survey of Industry Practices Richard Cobbs Alex Wolf
v) Airlines turn to outsourcing to keep lid on costs By Jane Wild @
4. Strategy implementation
Proper implementation of proposed strategy is critical to the success of any
strategy. As we have adopted two pronged strategy of achieving cost leadership
position, study of implementations should cater for this complexity. 4A model
application and discussion will cover aspects related to implementation issues
pertaining outsourcing strategy and fuel hedging implementation. In order to
successfully implement this two prong strategy, managers at Indigo will have to
follow PDCA approach, i.e. plan do check and Act. Broad implementation plan is
given in section 3.3 of this assignment.
4A model for testing execution capabilities of Indigo Airlines is focused on its
four key domains .It is pertinent to note that various inputs for this discussion have
been obtained from open sources from the internet and are purely academic in
nature. These domains are:
c) Architecture, and
14. 4.1 Alignment issues at IndiGo Airlines.
IndiGo Airline has been externally and internally aligned and this fact has been
demonstrated amply by its recent performance. IndiGo Airlines has a lean and focused
management which is performance driven. Top management is highly technology
driven and are known to have deployed state of the art analytic and real time Aircraft
location monitoring solutions.
Passenger Complaints during the month. (Source DGCA)
During May 2016, the number of complaints per 10,000 passengers carried for the
month of May 2016 has been 0.3 for IndiGo airlines. OTP at four metro airports
for the month of May 2016 is 83 % and is next only to Air Asia and Vistara. This
is a clear indication of good external alignment resulting in good performance
delivery. IndiGo Airlines operates the specialized iFly Learning and
Development Centre is where its staff is trained extensively is known to be the
best in India. Various processes and SOPs are standardized and continuously
improved. It helps IndiGo Airlines to align its employees with organizational aims.
4.2 Ability. Indigo has a lean and very capable management team at the helm of
affairs. Aditya Ghosh, 36, President, IndiGo Was General Counsel of InterGlobe
Group at 28.He was elevated to head IndiGo at 32. IndiGo has zoomed past
heavyweights like Jet Airways, Kingfisher. His stated mantra for success is “to be
accessible to employees”.
15. InterGlobe Air Transport, the holding company of Indigo Airlines provides
management consultancy and support to IndiGo. InterGlobe Air Transport (IGAT)
is a leading airline management company in India. With a portfolio of 10 of the
world’s most respected international airlines and IndiGo, the company manages a
broad spectrum of passenger and cargo operations. They provide cutting edge route
and revenue management services. Leveraging its existing businesses, the
company is now diversifying into airline related services such as Duty-Free
operations, ground handling and cabin crew management.
Considering impact and viability of our under study strategy, due to
organizational ability perspective, it is inferred that IndiGo has adequate ability to
implement these strategies. As pertaining finalizing Fuel hedging consultant, it is
one time exercise .Considering the vast experience IGAT has in this field it can be
safely assumed that the team will do a good job. As IGAT has its presence across
many countries, they can enter into fuel hedging contract on a global basis there by
reducing costs further.
Internet search indicates IGAT and Indigo has employed many top notch
business Analysts with top international qualifications. It implies that Indigo
management will not have any problem in analysing identifying underperforming
destinations. Once these destinations are identified finance department should not
have any problem in financing simple service contracts with suitable firms. It is
inferred that IndiGo Airline has required ability to undertake proposed
IndiGo Airlines has a lean centralized structure based on operational
efficiency and performance. Most of the KPIs are published and the whole system
revolves around real time feedback to concerned manager. Most of the
employment is based on two year contract renewable every two years.
Organisation is small and geared to quickly respond to various contingencies. Top
management is easily accessible for any decision. Payments to employees are not
amongst the best in industry and Indigo was able to scale up operations as
employees were worried about even worse conditions like irregular salaries or
closing down of many other airlines. Considering effect of organisation
architecture on implementation of proposed strategies, it is opined that
organisation architecture will not be an impediment for both of these sub
However in the foreseeable future, as IndiGo scales up operations the inherent
organisation structure will need to be strengthened. With Indian government
16. announcing opening up 100 % FDI in civil aviation, many International airlines
may want to set up fully owned operations from India. The cost advantage which
IndiGo used to leverage by paying less wages and having part time employees and
interns may not last longer. They will have to enhance efficiency and job security
of employees to retain talent. More over as the complexity of operations and scale
increases manifolds, central monitoring and intervention system may get
overwhelmed and degrade. IndiGo may have to go in for some regional operations
concepts to retain competitive advantage.
It is ability of an organisation to adapt to changing environment. As
pertaining impact on the proposed strategies, of Indigo’s inherent agility it is
opined that it has desired agility. Indigo has a lean operations team which is
renowned for precise performance driven operations. There are no managerial silos
or bureaucratic delays to slow down decision making. In addition excellent
international class training facilities reorient middle level managers towards
delivery and performance. Organisation learning is insured by having an umbrella
consultant team which oversees operations and provides management consultant
services to aviation businesses across the globe. Agility and ownership of decision
is ensured by a very objective performance evaluation system, which is also used
for term contract renewal of mid level managers. IndiGo Airlines owing to its very
lean central team exhibits very high and dynamic leadership unity and they are also
able to achieve high Resource fluidity. Considering these aspects it is opined that
IndiGo Airlines has enough Organisational agility to successfully implement
In order to plan and execute winning strategy effectively all the stages of analysis,
formulation and implementation have to be operationalized in synergy. Starting
point of Indigo’s strategy was its mission and vision. During the process of
analysis it was noticed that in the LCC space, where safety and on time
performance is more or less ensured by regulator, there is very little space for
offering differentiation. Technical innovations in the shape of better aircraft are
17. hard to come by and are known to all operators years in advance. In this market if
some operator has to survive, then management has to focus on cost leadership. It
was observed that IndiGo has used innovative means to cut cost, by multi tasking
check in staff. Even X Ray machines, where other operators have positioned
helpers, Indigo has done away with helpers and pasted notice for Indigo passengers
to load their luggage by themselves. These small cost cutting steps speaks volumes
regarding cost consciousness and focus by management.
During the process of strategy formulation, usage of various approaches
including War Room were studied and employed to elucidate strategy formulation.
Various options were thought of and hypotheses were tested against objective
criterion. Finally the winning strategies of Fuel Hedging and out sourcing non
core activities at least profit making destinations were selected for
While planning for implementation the strategies were again subjected to
organisation ability, agility, architecture and alignment. These tests bring out the
soundness of proposed strategy. Finally the proposed strategy is recommended for
execution as discussed in the plan.
6. Addendum of exhibits and citations:
3. Jet Fuel Hedging Strategies: Options Available for Airlines and a Survey of
Industry Practices Richard Cobbs Alex Wolf
5 Airlines turn to outsourcing to keep lid on costs By Jane Wild @