2. How is a low cost carrier (LCC) different from a
full service airline (FSA)?
• Point to point flights at secondary airports: avoiding investment in transfer passenger traffic
and saving on airport charges
• Single type fleet: savings on aircraft maintenance and flight crew training costs
• Single class cabin with lower seat pitch: increase in number of aircraft seats, typically by
• Baggage restrictions, unassigned seating and minimal in-flight services: reductions in
turnaround time and increase in ancillary revenues
• Using direct sales with heavy emphasis on internet: savings in sales & distribution costs
• Minimal ground services and outsourcing most non-flight operations: savings on airport
fees and administrative costs
3. Indigo is part of the industry which historically has suffered great
losses. However, Indigo has become the most profitable airline in
the industry very quickly? Explain
• IndiGo, India’s largest airline by passengers carried, reported a more than six fold
increase in profit to Rs. 787 crore for 2012-13
• The airline has increased its fleet capacity by 39% since last year(70 planes), while the
overall industry capacity shrunk by 4%
• Deployed 28% of its capacity and handled 27% more passengers in 2012-13, while the
overall industry’s passenger traffic fell by 5%.
• IndiGo’s customer ratings are high, service delivery is consistent with quality maintained,
operating and financial measurements are best in the industry
• Overall, IndiGo continues to focus on their business plan with strategic clarity and has
demonstrated high execution ability
5. What are the key sources of competitive advantage
• Indigo's stuck to its low-cost, single class model unlike rivals Jet and Kingfisher
• It implemented hub and spoke model.
• Selling and leasing back planes helps its balance sheet.
• Quality and detail key to good service-airline employs fewer people, with one of the
industry's leanest work forces.
• on-time performance is diligently monitored for every flight in real time via radio or
satellite called Aircraft Communications Addressing and Reporting System