I took an IndiGo flight from Lucknow to New Delhi yesterday. Sitting in the window seat in the 13th row, I was struck by how repetitive the IndiGo flying experience was. I could recall what the air hostess was going to monotonously say (“Being on time is a wonderful thing, and we here at IndiGo are committed to it”). I knew that the on-demand food server won’t have any cookies in store (they didn’t). Despite Delhi having 104 air-bridges on Terminal 3, passengers would be asked load in a bus and be driven to the terminal entrance instead (we were).
In that moment, it struck me — I had a few bad IndiGo experiments, and many neutral IndiGo experiences, but I couldn’t remember a single good IndiGo experience.
Usually, this spells doom. Being average at something almost always means some upstart young entrepreneur ready to disrupt your business. But this does not hold true for IndiGo. They own nearly 60% of India’s aviation market share. They are the only aviation company in decades to post profits in India.
How did IndiGo become such a successful monopoly?
Your Lean, Clean Flying Machine#
The Indian market is notoriously price sensitive. Low incomes put intense downward pressure on fares. IndiGo correctly bet that many of its customers would rather pay less than get a full-service experience during their flights — they cut out entertainment systems, meals, and business class seating. This managed to keep costs low and allowed the company to turn a profit.
This gave IndiGo a chance to develop some network effects by doubling the number of daily flights to and from popular locations, while introducing new flight paths to and through smaller cities. IndiGo currently boasts the most well-connected graph of flights across the country. Anywhere, anyday, anytime — you could find an IndiGo flight that’s a perfect fit for you.
The Little Guy#
There are some competitors in the market that are trying to challenge IndiGo’s lower pay service model. Vistara, a domestic full-service option, has gained rave reviews and developed a niche for itself in individuals who value comfort in their flights.
Aviation, however, is not a market that encourages niches. The cost of owning, maintaining and flying planes demands earning a lot of money to hope to not turn in a loss every quarter. Because of this, Vistara has had to move away from their full-service model, lowering prices, removing services, and gaining market share. It seems that recent Vistara policy is looking to create IndiGo 2.0 – an IndiGo with more options for comfort, but one that defaults to the minimal-service low paying model.
Doom on The Horizon?#
What, if anything, could shake IndiGo’s relentless grip on the aviation market?
Domestically, nothing in the short run. As long as customers value cheap tickets over services, IndiGo is going to make money hand over fist.
However, IndiGo has been looking to get into the international market recently. This is going to be a challenge for them. People who tend to fly internationally are more willing to splurge a little for comfort. IndiGo is now a little fish in a pond compared to behemoths like Emirates or Lufthansa. In sharp contrast to IndiGo, these companies have built a lot of goodwill over the years. In international travel, customer stickiness is much more important, and IndiGo has fumbled the ball on that one.
How Do You Sleep?#
IndiGo’s biggest challenge is that they have no brand loyalty. No one enjoys IndiGo flights, which means they have an audience ready to turn their backs on them the second someone ends up making cheaper flights.
IndiGo’s success is a function of the Indian market, not a function of IndiGo’s service.
When the Indian market changes — and it’ll be a while before it will change, but it will change — IndiGo would have to change their entire model, or be ready to die exactly like every competitor they killed.
I wonder if that keeps the executives at IndiGo up at night.