Saturday, March 18, 2017

Company of the Year: Flying high

InterGlobe Aviation, the company that operates IndiGo, India’s most profitable airline, has redefined aviation in the country. The airline, which started operations in 2006, has become the largest in the country and has proved that it is possible to consistently make profits in the highly competitive domestic aviation industry.

IndiGo has run a tight ship with an obsessive focus on cost. It brought in efficiency to reduce turnaround time, getting more out of each aircraft, without losing focus on quality, cleanliness and customer service. IndiGo was the first airline to tell customers that it respected their time and made “on-time performance” a key metric, and continuously reinforced the message. It also made flying a pleasurable experience with responsive attendants, innovative food and beverages, and quirky merchandise.

The company had announced its arrival with a bang in the 2005 Paris Air Show through a surprise $6 billion order of 100 planes, when very few had even heard about it. Naturally, people were sceptical. Teal Group, a US-based aerospace consulting firm, even said that the order would never convert into final deliveries. In 2016, the airline completed a decade of operations and is currently valued at around Rs 35,000 crore, many times more than the $80 million that promoters Rakesh Gangwal and Rahul Bhatia had initially invested.

The year 2015-16 was also a landmark one for the company, as it came out with its initial public offering (IPO) in October 2015. For the aviation industry, 2015-16 was a relatively comfortable year with soft crude prices, allowing airlines to add capacity in a mad rush for market share, but at the cost of losing pricing power. IndiGo, however, ended the year with a Rs 1,990-crore net profit, the highest in the airline’s history.
17/03/17 Arindam Majumder/Business Standard