BACKGROUND

The slogan of Etihad Airways is ‘From Abu Dhabi to the World. Etihad is a world-leading airline based in
the Persian Gulf. Etihad is currently known as one of the “Big 3” airlines based in the Middle East, the
other 2 being Emirates and Qatar Airways. Etihad airways was first appointed as the flagship carrier for
the United Arab Emirates (UAE) back in 2003. Since then, it has seen rapid success, becoming one of the
fastest growing airlines in commercial aviation history. Etihad Airways operates approximately 1300
flights per week to 86 different destinations around the world, on every continent with the exception of
Antarctica. The airline itself deals mostly with passenger transportation, but also has 2 other divisions
which are: Etihad Cargo and Etihad Holidays, a cargo service and in house program, respectively. Since
its first flight in 2003, Etihad has received over 30 prestigious air travel awards. The more notable awards
include:

• Best Business Class in the World 2009 (World Travel Awards)

• World's Leading Airline 2009, 2010, 2011, 2012 (Wold Travel Awards)

• World's Best First Class 2010 (Skytrax)

• Best First Class catering 2010 (Skytrax)

• Best First Class Seat 2010 (Skytrax)

ETIHAD’S CORE VALUES
Etihad airways follow 5 corporate values. They are ‘acting positively’, ‘caring about detail’, ‘taking
responsibility’, ‘delivering best practice’ and ‘inspiring the customers’ (Etihad Vision, 2010). These values
cover major important points which are necessary for the success of the business. Etihad believes in being
open, honest and supportive in everything they do. They like anticipating the needs of the customers and
always strive to be consistent. Etihad encourages staff to take the initiative, be proactive and persistent.
They are very passionate and care about their customers. Delivering the best, safe and most efficient
service is one of their main priorities. Etihad makes sure the people who are part of their family understand
and maintain these values so that they can uphold their standard consistently.

COMMITMENT

Etihad airways is really committed in its cause to become the best airline in the world. They manage to
balance all aspects of the company and keep it healthy for the smooth flow of business. Nowadays the
trend is to make important contributions to the environment and perform well on the corporate social
responsibility platform. Companies believe that by addressing CSR and improving the environment, the
profitability, risk level and the performance of an organization improves and there are long term rewards.
Despite this statement being true, companies must not just focus on this aspect. Etihad shows commitment
and sustainability by focusing not only on the environment and CSR, but also finances, jobs and
development of local communities, diversity, staff and sponsorships (Etihad About Us, n.d). Some
noticeable examples are:

 Finance (2012)
o Total revenue up by 17% from 2011 to US$4.8 billion
o Net profit of US$42 million
 Jobs and local communities
o Increased number of employees in 2012 by 18%
o UAE nationals comprise 22% of the workforce
o All female Emirati contact Centre in Al Ain
 Diversity and staff
o More than 14,500 staff representing 125 nationalities
o Dedicated Etihad Airways Medical Centre
o Regular wellness days with preventative care checks
o ‘Fit 2 Fly’ leisure facilities in major residential locations
 Sponsorships
o 10-year partnership deal with Manchester City Football Club
o Formula 1 Etihad Airways Abu Dhabi Grand Prix
 o Continued sponsorship of Harlequins Rugby Club, GAA Hurling in Ireland and the Etihad
Stadium Melbourne
 Environment
o 24% improvement in carbon emissions per passenger kilometer since 2006
o Invested in aviation biofuel development in Abu Dhabi and the first biofuel flight in 2012
o A successful water saving campaign for staff in 2012

VISION AND MISSION

“As the National Airline of the United Arab Emirates, we seek to reflect the best of Arabian hospitality -
cultured, considerate, warm and generous - as well as enhance the prestige of Abu Dhabi as a center of
hospitality between East and West”

“Our goal is to be a truly 21st century, global airline, challenging and changing the established conventions
of airline hospitality”

“As well as a relaxing experience, we also strive to make travel safe and environment-friendly by
practicing the highest global standards in both these areas”

(Etihad Vision, 2010)

We can see that the vision of Etihad airline is also closely linked to its Arabian heritage in particular. The
vision of the airline is also to become one of the global airliners that exude a truly 21st century, where
challenges, and changing environment, plus an engaging vision to break the convention, constitutes its
deep rooted vision.

Etihad Airways mission like any considerate corporate is to “give a refreshing welcoming to their guest,
where travel should be safe and secure in an environment that is friendly, and where global standards in
both terms is practiced, be it hospitality or in the technical aspects in assuring a safe journey for its guests.”

OBJECTIVES

To provide airline carrier services to its esteemed customers globally with the dedication of meeting their
clients' expectations. Additionally, the airline was established in the United Arab Emirates to bear the flag
globally.

HISTORY
Etihad Airways was established as the flag carrier of the United Arab Emirates in July 2003 by Royal
Decree issued by Sheikh Khalifa bin Zayed Al Nahyan. It started with an initial paid-up capital of AED500
million. Services were launched with a ceremonial flight to Al Ain on 5 November 2003. On 12 November
2003, Etihad commenced commercial operations with the launch of services to Beirut, and has gone on to
become the fastest growing airline in the history of commercial aviation.

In June 2004, the airline made an US$8-billion aircraft order for five Boeing 777-300ERs and 24 Airbus
aircraft, including four A380-800s.

The airline announced what was the largest aircraft order in commercial aviation history at the
Farnborough Airshow in 2008, for up to 205 aircraft — 100 firm orders, 55 options and 50 purchase rights.

As of February 2013, the airline operates passenger and cargo services to 86 destinations around the world
from its home base in Abu Dhabi.

Porter's 5 forces model

Porter's five forces model is an industrial framework which is used as a tool for business planning,
development, and analysis. In the airline industry, we use this model to specifically measure the
competitive intensity to get a grasp on the actual attractiveness of a market. Porter's five forces model
takes the following factors into consideration:
• Threat of new entrants

• Rivalry among competing firms

• Threat of substitute product

• Bargaining power of customers

• Bargaining power of suppliers

Threat of new entrants

The aviation industry in the United Arab Emirates is considered to be one of the most successful in the
entire world. The huge market growth in recent years has been due to the success of 5 of the Middle East's
top airlines. They consist of “The Big 3” : also known as Emirates, Etihad airways, and Qatar airways.
The other 2 are low cost airlines Fly Dubai and Air Arabia. The strategic location of the Middle East as a
potential hub that connects passengers between the Eastern and Western hemispheres, along with also it's
closeness to Europe, makes the country an area with high potential and opportunity for those trying to
penetrate the airline industry. The industry in itself is undergoing a redevelopment plan which will allow
all 8 international airports in UAE to be able to collectively be able to serve over 300 million passengers
per year. All five of UAE's main airlines, along with other smaller airlines are rapidly trying to increase
their fleet and get ahead of the competition. The competition is so intense between the 5 airlines that it
leaves little room for companies to try to win a market share battle with these aviation giants. Airlines
have tried and failed to take advantage of UAE's strategic location and compete in the same market as
those I had mentioned earlier. There is room in the future for more competition and new airlines to jump
in the mix, however, the competition is so intense right now that it is decreasing each rival's revenue in
order to acquire the biggest fleet despite a demand that has not skyrocketed.

There is room for the introduction of more low cost airlines in UAE's airline industry. The recent
worldwide economic problems have lead many more people to opt to fly low cost airlines only, caring less
about the frills and benefits of large commercial airlines and caring more about the total cost and getting
from destination to destination. The big 3 airlines possess products that cater to a more high income crowd
and can only be considered indirect competition to low cost airlines.
Above is a chart showing Dubai airport's increase in international passengers in February 2010, from
Airports Council International.

Rivalry among competing firms-

Obvious rivalries exist between airlines within UAE's airline industry, as well as with airlines on the
outside. Etihad airlines will always face still competition in every facet of business from Emirates and
Qatar airways. This is due to the similarity of the products, the penetration of the same market, and similar
visions and goals. Etihad airways competes with Emirates and Qatar on all levels. The similarity of their
resources and capabilities makes it very difficult for one airline to get far ahead of another airline at any
given time. Any innovative breakthroughs seen by one airline will only result in the reproduction of a
product/marketing plan by its rivals in order to duplicate their ability to find innovative ways to create
value for customers.

Low cost airlines Air Arabia and Fly Dubai are more rivals to one another than to Etihad airways, however
they are competition nonetheless. Like I stated above earlier, low cost airlines have a good opportunity to
be successful in the market with the unstable economy and recent world economic crises.
Threat of a substitute product-

There is a high threat level in terms of other airlines that can offer substitute products. These include the
obvious 2: Emirates and Qatar, along with other world leading airlines operating close by out of Europe.
Some of these European airlines include: Luftansa, KLM, and British Airways. These airlines all have
something in common in that they are all aiming to expand to more areas of the world because they all
possess high brand value and customer loyalty, along with strong strategic locations as an international
hub. These world leading airlines will always aim to offer the best products and services in their own
right, but are also challenging one another to keep coming up with innovative business strategies. When
new technology is available, all of these airlines are first to line up for the product, as they were for the
Airbus A380 when it was first launched. It is an approach that speaks of their intentions, to compete on
the world stage with top brands. Product similarity will always be an issue for these companies as they
have access to the best there is, therefore they are forced to also compete heavily via their marketing
strategies and tactics. Etihad airways can usually be considered the second mover to Emirates, where
Etihad will always move to copy or counter Emirate's marketing tactics but will make sure to wait for them
to make the first move.

Bargaining power of customers

Local and global competition between airline companies is very high and continuing to increase as more
and more people gain a demand to travel via commercial aviation. Customers have high bargaining power
when it comes to airlines because of the vast number of choices available. High competition between
airlines globally ultimately give customers the power to choose which airline is right for them. On a more
local scale of competition, Etihad airlines has to not only worry about Emirates and Qatar Airways, but
also making their economy class appealing to customers who opt to fly low cost airlines instead.
Customers stand not only to benefit from the financial competition that stands between these airlines but
also their individual loyalty programs, each designed to generate a sense of membership for customers and
keep them loyal to their brand. Loyalty programs are a large part of a commercial airline's appeal in the
market today.
Bargaining power of suppliers:

Etihad's suppliers are similar to those of most other airlines. This would be the two global aviation giants,
Boeing and Airbus. These suppliers dominate the world airline industry and have all the power, as they
are the ones who decide the quality and pricing of their products. They have the option of increasing or
reducing their product pricing or quality as they please because of such a high demand for their products.
This makes the bargaining power of their suppliers much higher than that of Etihad Airways themselves,
and makes Etihad very sensitive to changes to their suppliers. One way suppliers can appeal their product
to an Airline is by choosing to deal in bulk, such as signing contracts which may result in the purchase of
many planes over a period of a few years, in exchange for a cheaper initial price of each plane.

EXTERNAL ENVIRONMENT ANALYSIS

a) Environmental scanning

Environmental scanning can be defined as the study and interpretation of the political, economic, social
and technological events and trends which influence a business, an industry or even a total market. The
factors which need to be considered for environmental scanning are events, trends, issues and expectations
of the different interest groups.

After analyzing the external environment, the events or trends that can influence the business and the
market are:

• High level of income inequality in the MENA region. It can make or break a business in terms of
revenue depending on the marketing strategies adopted.

• Slow and stagnant growth of the oil importing countries, while the GCC countries are receiving
strong economic growth. Mainly due to the oil reserves available in those countries.

• The negative effects of the Arab spring on the economy and the airline industry

• Europe is showing signs of recovery in 2014 due to the growth of new EU countries and their
flexible economic polices

• New technological development of aircrafts which will be efficient and sustainable for the future
(Boeing collaboration with NASA – Boeing 777x)

• Investment in the development and commercialization of bio fuels or alternate fuels

• Increase in travel demand, which will lead to shortage of pilots and staff in the future.
b) Environmental Monitoring

Environmental monitoring describes the processes and activities that need to take place to characterize and
monitor the quality of the environment. The activities done by Etihad to monitor the environment are:

• Despite the Arab spring, services are still being offered to these countries. There is low tourism
demand and slow economic growth, but Etihad continue to be unfazed by this and are offering more
services instead.

• The strong economic development of the GCC countries and some places in Europe (such as UK)
are monitored. Therefore more services are being targeted at these regions due to their economic growth.
At the same time the situation of Eastern Europe is being monitored due to their flexible economic
policies.

• Etihad is up to date with its technology of aircrafts. Recently they ordered 25 mini jumbos 777x,
and 30 of the 787-10 Dreamliner, and 1 777 for the cargo for a total of $25.2 billion. This shows that they
are monitoring the latest technological trends and are up to date with their direct competitors. New models
of airlines bring more eco efficiency, therefore Etihad are monitoring their environmental footprint as well.

c) Environmental Forecasting

Forecasting is attempting to predict the nature and intensity of the micro environmental and macro
environmental forces that are likely to affect a firm's decision making and have an impact upon its
performance in a given period. The activities which can impact performance and need to be forecasted are:

• The introduction of the Boeing 777x models into the world in 2020. This project is collaborated
with NASA in order to make models like never seen before. If this project goes as planned, it will change
the face of aircraft technology in terms of eco efficiency. Etihad already forecasted this and therefore
ordered 25 mini jumbos of Boeing 777x for the time being.

• The Arab spring promises to bring strong economic growth once these crisis are over. The reason
these crisis are going on is because the people want change in their society. At the moment the economic
situation of these countries are not very strong. Despite this Etihad chooses to stick with them because they
forecast strong economic growth after these crisis are ended.
d) Environmental Assessment

This is the last step of the analysis where all the findings are collected and reviewed together, and
probabilities are calculated. The important findings from the external analysis which need to be assessed
are:

• Fluctuating economic conditions of the Arab spring countries are affecting the business, but
services are still being offered. This is because there is promise of strong economic growth once these civil
crisis are over. Not all countries in MENA are facing this problem, therefore there is some sort of balance
found there. The GCC countries are well to do, therefore current strategies in the MENA region can be
based around them for the time being in order to generate revenue and make up for loss. It already has
been happening with increased number of flights to the GCC countries

• Technology and the airline industry go hand in hand. Airlines need to be technologically updated
not only for the safety and security of the passengers, but also for reducing environment footprints and
giving good competition to competitors. With the new eco efficient models of aircrafts coming out
nowadays, and future models (Boeing NASA project) Etihad assessed this situation by buying new models
for its current fleet and placing orders for the future ones. It is really expensive considering the billions of
dollars spent, but the reduction in fuel consumption, increase in efficiency, handling, size, and low
environmental impacts makes this step justified.

Etihad Airways

Parent Company Government of Abu Dhabi

Category International

Sector Airlines

Tagline/ Slogan From Abu Dhabi to the World

USP Etihad Airways connects the world through Abu Dhabi

Etihad AirwaysSTP

Segment Passengers Preferring Comfort / reliability

Target Group Corporates / Upper Middle Class / Middle Class

Positioning Etihad Airways is a global airline which gives a grand experience of flying

Etihad Airways SWOT Analysis

1. Etihad Airways is the flagship airline brand of Abu Dhabi

2. Being centrally located gives access to Europe and Asia
3. Etihad Airways has over 1,000 flights per week
4. Over 55 countries are covered extensively across the world
5. Good branding and visibility of Etihad Airways and it has actively
sponsored many events
6. The company has more than 20000+ employees
7. Etihad Airways has focused on quality customer service, in-flight
Strengths entertainment systems and exclusive lounges

1. The airlines only serves international destinations which means high

operating costs
2. Market share growth of Etihad Airways is restricted due to intense
Weaknesses competition level

1. Etihad Airways has a new fleet which gives rich customer experience
2. More global destinations can be tapped to increase reach of business
Opportunities 3. Tie-ups with airports to give premium facilities to passengers

1. Increasing Competition in Middle East market can affect business

of Etihad Airways
2. Increasing costs of fuels affects margins
Threats 3. Changing Govt policies and international aviation rules and regulations

Competition

1. Air India
2. Singapore Airlines
3. Emirates
4. Malaysia Airlines
5. Qatar Airways
6. Qantas Airways
7. Lufthansa
8. British Airways
9. Turkish Airlines
10. Air France
Competitors 11. Virgin Atlantic
 12. United Airlines
13. Jet Airways

External factor analysis summary

External factors weight rating Weighted score

Opportunities

1. Etihad Airways has a new fleet which 0.4 4 1.6

gives rich customer experience

2. More global destinations can be tapped to 0.2 4 0.8

increase reach of business

3. Tie-ups with airports to give premium 0.2 3 0.6

facilities to passengers

Threats

1. Increasing costs of fuels affects margins 0.1 3 0.3

2. Changing Govt policies and international 0.1 3 0.3

aviation rules and regulations

Internal factor analysis summary

Internal factors weight rating Weighted score

strengths

1. Etihad Airways 0.15 4 0.60

is the flagship
airline brand of
Abu Dhabi
2. Being centrally 0.10 3 0.30
located gives
 access to Europe
and Asia

0.05 4 0.20
3. Etihad
Airways has over
1,000 flights per
week
4. Over 55 0.5 3 0.15
countries are
covered
extensively across
the world

5. Good branding 0.10 3 0.30

and visibility of
Etihad
Airways and it has
actively sponsored
many events

6. The company 0.16 4 0.60

has more than
20000+ employees

Weakness

1. The airlines only 0.20 4 0.8

serves international
destinations which
means high
operating costs
2. Market share 0.20 4 0.8
growth of Etihad
Airways is
restricted due to
intense competition
level
 INDIGO AIRLINES

Our mission
Our passionate and creative team will innovatively provide small project facilitation, business writing and
grant writing to clients expecting high quality results, reliability and excellent customer service.

Our vision
Our vision is to be a successful, world-standard company, working closely with business and organisations
to improve their results. We will achieve this by understanding client’s needs and providing quality
products and services that exceed their expectations. A strong community commitment is incorporated
into our work whenever possible. We look forward to the journey with passion.

Our values
 A commitment to high quality customer service.
 Clear and open communication to ensure the best results.
 Reliability and integrity as a strong foundation for building trust.
 Efficient service and quality products.
 Innovative thinking.
 A sustainable environment to be enjoyed by future generations.
 The importance of enjoying life and work.

CHAIRMAN’S SPEECH

 I am delighted to report that FY17 has been another exciting and fulfilling year at IndiGo. We
continue to build on our strong foundation. This was our ninth consecutive year of profitability
with a profit after tax of Rs.16592 million. Traffic growth continued to be strong during the year.
We witnessed a growth of 31.5% in our passengers during the year much higher than the growth in
capacity of 27.5% for the same period. Our total revenue increased by 16.3%.
 Being a low-cost carrier committed to delivering low fares it is essential that we keep a watchful
eye on our costs. This focus on costs has enabled us to reduce our cost per ASK (CASK) excluding
 fuel which reduced by 6.3% last year despite overall inflationary pressures. In the last year we
added 24 aircraft including 16 fuel-efficientA320neo aircraft. The A320neos continue to perform
well on fuel burn and we are seeing significant fuel savings on these neo aircraft compared to our
A320ceos.
 We added Port Blair Madurai Amritsar and Sharjah to our network during the last fiscal year taking
the total number of cities on our network to 44.
 We continue to invest in the long-term growth opportunity of India and our fleet is expected to
grow for many years to come.
 There are many un served and under-served cities in India which require reliable air transportation.
India's
 Tier 2 and Tier 3 cities are becoming the new growth engines and our planned turbo prop operation
will cater to this growing demand. On the international side we believe that India represents one of
the largest untapped international air transportation market opportunities that is out there and
IndiGo is a natural player to take advantage of this opportunity specifically because of our large
domestic network. We believe we are well-positioned to capture a share of this international traffic
by providing passengers non-stop flights at low fares.
 IndiGo's operational performance hinges around consistency. IndiGo was recognised as one of the
leading
 On-Time Performers in the Asia-Pacific region by Flight Stats Inc. - a leader in global flight
information services part of Flight Global – in the 8th Annual Airline On-Time Performance
Service Awards January 2017.
 We continue to invest in technology and have entered into our first GDS agreement with Travel
port. As we take deliveries of more aircraft and enter new markets this partnership with Travel port
will help us reach new customers in a cost-effective manner without incurring the traditional costs
associated with participating in global distribution platforms. This will make it easier for travel
agents around the world to access the IndiGo inventory and sell tickets for IndiGo.
 IndiGo remains one of the best employers in India and a great place to work in. Once again IndiGo
was named as one of the Best Employers in India during the AON Best Employer Survey. We grew
considerably in the number of respondents who participated and more than80% of our eligible
population took the survey. Over 200 companies were considered representing 12 key industries.
This is a recognition that is very close to my heart.
 We continue to make a deep impact in the communities we serve with the various initiatives under
our CSR program called IndiGo Reach. We believe we have the Power to Make a Change.
 Amongst the many accolades that we received this year the high points were that IndiGo was
named once again as the Best Low Cost Carrier – Central Asia / India at the Skytrax World Airline
Awards; IndiGo was adjudged as Company of the year at Business Standard Award for Corporate
Excellence 2016 and The Emerging Company of the Year 2016 at the ET Awards for Corporate
Excellence. For an airline in India to get named Company of the Year is a big shot in the arm for
the entire aviation sector in India. It is also a testimony to the hard work that 15000 of my
colleagues put in literally every day 24/7putting their heart and soul behind every turn and pushing
out planes every minute somewhere on our network. At the same time the high expectations from
us just have got higher! We will keep trying hard to deliver on the promises we make!
 Our growth is unprecedented in the world of aviation and taking this as an opportunity we need to
keep on improving to become a consistently-performing world-class airline.
 I wish you all many more 6E flights to come!
Aditya Ghosh
SWOT ANALYSIS

SWOT Analysis of Indigo Airlines with USP, Competition, STP (Segmentation, Targeting, Positioning) - Marketing
Analysis

IndiGo Airlines

Parent Company InterGlobe Enterprises

Category Indian domestic sector

Sector Airlines

Tagline/ Slogan Go IndiGo

USP Indigo Airlines gives on time performance at the lowest prices

Indigo Airlines STP

Segment Cost Conscious Passengers

Target Group Lower Middle Class / Middle Class

Positioning Indigo Airlines is a low cost no frills airlines connecting India

Indigo Airlines SWOT Analysis

Strengths Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of
Indigo Airlines :
1. Indigo Airlines has strong backing promoters and is one of the largest low
cost carriers in India
2. Only LCC to make consistent profits
3. Indigo Airlines has one of the major airlines in India in terms of market share
4. Indigo Airlines has entered international markets has boosted its brand value
5. Good advertising and marketing strategies have increased its brand recall
 6. Excellent offerings and on-board services provided by Indigo Airlines
7. More than 10000+ employees are with Indigo serving more than 40 million
passengers

1. Indigo airlines has limited market share growth due to intense competition
Weaknesses 2. Still has to establish itself on international destinations

1. Opening up of International routes can boost business of Indigo

2. Largest market share among LCCs in Indian Market
Opportunities 3. Middle class taking to the skies can be a huge opportunity for Indigo airlines

1. Plenty of new LCCs to compete with for Indigo airlines

2. Rising Labour costs and changing govt policies
Threats

External factor analysis summary

External factors weight rating Weighted score

Opportunities

1. Opening up of International routes can boost 0.4 4 1.6

business of Indigo

2. Largest market share among LCCs in Indian 0.2 4 0.8

Market

3. Middle class taking to the skies can be a huge 0.2 3 0.6

opportunity for Indigo airlines

Threats

1. Plenty of new LCCs to compete with for Indigo 0.1 3 0.3

airlines

2. Rising Labour costs and changing govt policies 0.1 3 0.3

Internal factor analysis summary

Internal factors weight rating Weighted score

strengths
 1. 1. Indigo Airlines 0.15 4 0.60
has strong backing
promoters and is
one of the largest
low cost carriers in
India

2. Only LCC to make 0.10 3 0.30

consistent profits
0.05 4 0.20
3. Indigo Airlines has
one of the major
airlines in India in
terms of market
share

4. Indigo Airlines has 0.5 3 0.15

entered
international
markets has boosted
its brand value

5. Good advertising 0.10 3 0.30

and marketing
strategies have
increased its brand
recall

6. Excellent offerings 0.16 4 0.60

and on-board
services provided
by Indigo Airlines

Weakness

1. The airlines only 0.20 4 0.8

serves international
destinations which
means high operating
costs
2. Market share growth 0.20 4 0.8
of Etihad Airways is
restricted due to intense
competition level

STRATEGIES OF INDIGO AIRLINES

1. IndiGo has made sure that its average fleet age remains four years till 2032. It was a well thought-out fleet
strategy that was made 10 years back, and not something done a couple of months ago. The last plane of the three
bulk orders of 530 aircraft that IndiGo placed will come in 2026 — 100 Airbus A-320 in 2005, 180 A-320 Neos
in 2011 and 250 A-320 Neos in 2015. IndiGo’s bulk buying helped negotiate better rates. We buy planes at a
lower price than what a seller would buy for. We gain right at the beginning — this is netted against our rentals
and brings our cost down.
2. Once all airplanes are delivered, IndiGo will not have a fleet of 530 planes — this is due to the ‘buy, sell and
lease back’ strategy. At peak we will have 330 planes. Once the order is placed the planes are sold to lessors at
market price. The planes are then leased back for the next six years — which means for the first six years IndiGo
receives a plane every month.
3. Every month a plane goes out of IndiGo’s fleet and a new aircraft joins, thus reducing the average fleet age, and
with an average fleet age that is low the cost of maintenance is also lower. In 2011, IndiGo was the first customer
for Airbus to order the new range of fuel efficient A-320 Neo planes. Neos help in saving 10-15% of the overall
fuel cost. Fuel makes up for 50% of a carrier’s cost.
4. Because of the six year lease back plan, with the next two-and-half years one-third of IndiGo’s fleet will be
Neos, and in the next six years it will have an all Neo fleet. There is a straightaway positive impact of 7% on the
company’s bottomline because of of the Neos. People can copy our food, our advertising, our buses, and other
things but they cannot replicate the fleet we have.
5. With orders in place, IndiGo is planning to increase its presence in the number of cities it flies to — adding two
to three cities to its portfolio every year. In the next eight and half years it plans to have presence in 56 airports
compared to 33, now. Regional flying is not on the radar, and neither are smaller planes. We do not have any
plans to induct smaller planes into our fleet. Nobody in this world has been able to implement a two-model
strategy.