Saturday, March 18, 2017

Low cost does not imply low quality: Aditya Ghosh

IndiGo’s success can be attributed to a combination of the management’s vision and strategy, its obsession with controlling costs and a reliable experience for customers. Aditya Ghosh tells Arindam Majumder how the company’s structural advantages enable it to remain profitable across business cycles. Edited excerpts:

Besides your low-cost model and focus on running a tight ship, what other factors explain your consistent performance year after year?

While our profitability and growth have been driven by a disciplined execution of low-cost carrier principles, we have also created certain structural advantages in our model which result in competitive advantage for us. We are the domestic market leader in India and provide connectivity to a large number of airports with a fleet of 129 aircraft, with over 850 flights a day.

While we continue to add new destinations, we also strengthen the density of our network by adding flights in our existing key markets in a sustainable and profitable manner. Many of the cities we fly to are smaller cities which hitherto didn’t have enough air connectivity and certainly not at the affordable price point that is available today. We aim to provide courteous, hassle-free and affordable service to our passengers. Besides these competitive advantages, we have some structural advantages which enable us to remain profitable across business cycles.

How has the single-aircraft model benefited you?

The single type of airframe within our current fleet helps us reduce our expenses related to maintenance, operation, crew training, as well as manage crew rosters efficiently. We offer a single class of economy service, which allows our A320 aircraft to have the maximum seating capacity of 180 seats. Unlike most full-service carriers, we do not offer a frequent flyer programme, free lounges or include food and beverages in our ticket price for non-corporate passengers. These items have helped to further reduce our cost base. It also means that the customer is not left guessing about the type of experience they can expect from us. It’s a consistent, simple and reliable product that customers have come to love.

 How do you see the aviation market in India?

We see a huge opportunity to serve the people of this country. We are fortunate to be operating out of India which is one of the world’s largest and fastest-growing air travel markets and is touted to become the third-largest aviation market by 2020 and the largest by 2030. India is also one of the least penetrated aircraft markets in the world with only around 300 commercial planes flying domestically for a population of 1.2 billion. Even countries like Indonesia and Philippines have three or four times the aircraft density of India. This leads to a mismatch of supply and demand, leading to high fares which are often beyond the reach of the common man. This is why we are so obsessed with having a low-cost structure which translates into low fares for the common man of the country and profitability for us.
17/03/17 Arindam Majumdar/Business Standard