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OPERATION MANAGEMENT

STUDY ON AVIATION INDUSTRY


IN INDIA
Presented by
Ravi Ranjan
2011MB24
1st Year

INDIGO AIRLINES
Go indigo

Outline
Industry Overview
Indigo Airlines
Value Chain
Strategy Formulation
References

Deregulating Indias Civil Aviation


Prior to 1991, aviation, much like other major sectors of the Indian
economy, was nationalized and heavily regulated.
The Air Corporation Act, 1953, changed the landscape of the airline
industry in India.
It was in 1994 that the Air Corporation Act was repealed

and thus this allowed private operators to operate in the


domestic airline and aviation industry.

Sector Details (India)


Size
About 75 million passengers
$ 5.6 billion

Growth
Around 15% growth in last 10 years.
Vision 2020 statement predicts handling 280
million customers by 2020

SEGMENTS IN AVIATION
AVIATION
Civil Aviation

Full Cost Carriers

Service

Competitive Pressure

Low cost Carriers


changing the game

Indigo

Price

Indigo history
IndiGo is a private, low-cost airline based in
Gurgaon.
IndiGo was founded by Mr. Rakesh Gangwal and Mr.
Rahul Bhatia
Commenced operation August 4, 2006
The parent company of the airline is Inter Globe
Enterprises.

hubs
Primary Hub
Indira Gandhi International Airport, Delhi

Secondary Hub
Chhtrapati Shivaji International Airport, Mumbai
Neta Ji Subhash Chandra Bose International Airport,
Kolkata

Major Cost Components


Aviation Turbine Fuel costs
Personnel wages
Parking and Landing tariffs
Cost of developing airports
Aviation parts

Fuel Prices remain a major hurdle

Source:

Organizational Charts
Airline
Operations
Ground support
equipment
Maintenance
Ground Operations
Facility
Maintenance
Catering
Flight Operations
Crew scheduling
Flying
Communications
Dispatching
Management science

Finance/ accounting
Accounting
Payables
Receivables
General Ledger
Finance
Cash control
International
exchange

Marketing
Traffic
administration
Reservations
Schedules
Tariffs (pricing)
Sales
Advertising

PreAirport
Promotion
notification
Travel planning
Reservations and
booking
Ticketing
Flight delay
notification
Virtual check-in
and seat
assignment
Transportation to
airport and
parking
Frequent flyer
account
management

Airport
Airport check-in
and seat
assignment
Baggage check
Security
Airport shopping or
dining
Club room access
Airport waiting
areas
Boarding pass and
boarding
Gate location

InFlight

PostFlight

Baggage storage

Gate connections

Entertainment
Meals

Baggage claim
information

Shopping

Baggage pick-up

Connectivity

Customer service
and complaint
management
Transportation from
airport and parking
Frequent flyer
account
management

Value Chain
Customer Layer
-passengers and travel
agents demands for new
services or changes in
services

Operations Support Layer


-it analyze the demand and
tells core operation layer
what value addition to be
done
Core operations layer
-work with
innovation layer to
fulfill the demand.

Layer of innovation
-innovates new strategy to
help core operation layer
to fulfill the demand

Supplier Layer
Purchasing of items
or new technology it
done here.

Strategy Formulation Process


Competitive dynamics
at market place

Order winners
Order Qualifiers

Strategic options for


sustaining competitive
advantages

Firm level strength


& weakness

Strategic
decisions for
operations system

Generic competitive
priorities- Quality,
cost, delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Competitive dynamics at market


place
India has the private airlines as its key players
75% of the market share is owned by the private
sector.
India is the 9th aviation market in the world.

Indigos Market Share

Source: Ghalla Bhansali Stock

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Strategy formulation
Order qualifier
Good in flight environment
Promise of on-time performance
Good baggage handling system
Order winner
Designed clean, comfortable and reliable airline
without costly frills
Notify you in advance through SMS
Flexible refund policy

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Generic competitive priorities (quality,


cost, delivery, flexibility)
Quality over hired pilots, especially highly trained
and experienced pilots and training captains, far more
than the normal hiring ratios.
Cost - provide value added air travel services at
economical prices.
Delivery- no delaying flights.
Flexibility- The carrier also uses ramps instead of
boarding ladders.

The on time departures


and arrivals

Source: Ghalla Bhansali Stock Brokers

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Strategic option for sustaining


competitive advantage
The 100 Airbus A320 aircraft deal signed in 2005
was a game changer
US$15 billion deal of new 180 Airbus A320NEO
aircraft during year 2011
For maintenance Indigo outsource its aircrafts to Sri
Lanka because of unbearable tax
Offering simple fair scheme

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Firm level strength & weakness


Strengths
Introduction of Airbus A320NEO
Route rationalization
Low fair airline
Service delivery to metros, big cities and tier-II cities
Weaknesses
Indigo have no business class section
Low cost equates to low quality
Getting more of the same planes with the current technology
No in flight entertainment facilities

INDIGO ROUTE
MAP

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Corporate strategy
Using efficient model carrier, Airbus A320
Low cost operations
Attracting customers with low-fare
Expand international operations
Fully funded and having a great business case it was
able to concentrate on brand building and achieving
operational excellence.
A tight control on cost

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Measures for operational


excellence
Lower staff cost
Sale and leaseback of aircraft
Over-hired pilots, especially highly trained and
experienced pilots and training captains, far more
than the normal hiring ratios.

Strategy Formulation Process


Competitive
dynamics at
market place

Order
winners
Order
Qualifiers
Strategic options for
sustaining
competitive
advantages

Firm level
strength &
weakness

Strategic
decisions for
operations
system

Generic
competitive
prioritiesQuality, cost,
delivery,
Flexibility

Corporate
strategy

Operations
strategy

Measures for
operational
excellence

Operational strategy
Optimum fuel utilization
Multitask
Asset use- No magazines, newspapers, tea, coffee and
ovens onboard.
Light outs
Avoid five star hotels

Net profit (in Rs crore)

Source: Ghalla Bhansali Stock Brokers

References
www.zenithresearch.org.in
www.goindigogo.net
www.uaeexchangetravel.com
www.cabincrewrecruitment.net
www.interglobetechnology.com

THANK YOU