New Delhi/Mumbai: It’s not all doom and gloom for India’s embattled airline sector. IndiGo, a low-fare carrier launched in 2006, has climbed to second place in market share at the expense of Air India and Kingfisher Airlines and is the only one of India’s six main carriers making a profit, for now at least.
While Kingfisher and market-leading Jet Airways have bought rivals, fly multiple plane models and have struggled to mix full-service and low-fare options, IndiGo offers one class of no-frills service on a single type of plane, the same strategy pioneered by US-based Southwest Airlines. IndiGo also sells and leases back its planes, sparing its balance sheet and allowing itself to maintain a young fleet.
Kingfisher, headed by liquor baron Vijay Mallya, has never made a profit and has grounded more than half of its planes as it struggles to pay staff and creditors and scrambles to find investors. Tax authorities last month froze its bank accounts. “Indigo has done everything right which Kingfisher has done wrong,” said Rajan Mehra, executive director at the Asia Pacific Academy for Aviation and Hospitality.
Industry watchers say there is no great secret to IndiGo’ssuccess, which they attribute to rigid adherence to a disciplined business plan, a task that grows more complex as the 50-plane airline adds a new plane every month. Still, IndiGo is not immune to the industry’s myriad headaches that include fierce competition, a weak rupee, high taxes, rising airport fees and the high cost of oil. “Indigo so far might have been doing better than the others, but they are facing the same operational costs, the same infrastructure constraints,” Mehra said.
06/03/12 Reuters/mydigitalfc.com
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