IndiGo and SpiceJet – the rise of the value airline

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Interglobe Aviation promoted IndiGo airlines is on a high. Like it’s compatriot SpiceJet, it has been steadily growing using fine strokes to keep it’s costs low and constantly improve it’s value proposition to it’s customers.

With 20 aircraft which constitutes about 6.5% of the total commercial airliner population of India, IndiGo’s has grown it’s market share to 13%, up 3% from a year ago. Another impressive achievement is it’s industry leading passenger load factors of 70%+, bettered only by niche regional carrier Paramount Airways.

Quite evidently market leader Kingfisher Airlines sees IndiGo as a serious threat. Over the last fortnight, I have observed advertising hoardings (billboards in the US), all over Bangalore, attacking Indigo. The ads feature the colours and fonts of the two airlines.

I cannot but help compare SpiceJet and IndiGo. Both airlines are New Delhi based, both went through a senior level management shake-up and have new CEO’s, both of whom are very low profile but are known to have backbones of steel, both airlines are obsessed with reducing cost while improving the customer service experience both from a hospitality and a value-for-money viewpoint, both airlines have increased their market shares at the expenses of mainline carriers Air India, Jet Airways and Kingfisher, and both airlines are growing their fleets steadily, unlike their two private mainline competitors Jet Airways and Kingfisher.

SpiceJet will add to it’s existing fleet of 19 Boeing 737s twelve new Boeing 737 next generation aircraft over the next three years, while IndiGo will add ten new Airbus A320s to it’s existing fleet of 20 A320s by end 2010, four this year and six or seven next year. IndiGo operates 128 daily flights while SpiceJet operates 119.

Despite keeping an eagle eye on costs, these two airlines’ customer friendly approach is in sharp contrast to carriers in North America and Europe who have been criticised for fleecing passengers with ‘a-la-carte’ pricing for previous bundled services like checked baggage, using airport check-in instead of the web, etc., and the now infamous proposal of Ryanair for usage of the on-board toilet. Both airlines do not charge for check-in baggage or airport check-in, even though both offer web check-in, and they both sell food and non-alcoholic beverages on board.

With the arrival of it’s 20th aircraft VT-INY, IndiGo announced introduction of three new daily flights taking it to 131 daily flights connecting 17 destinations. The time table also provides an excellent insight in to the daily workload of an aircraft at IndiGo and also the operational efficiencies at various airports in India.

From	To	Flight no.	Departure	Arrival
Hyderabad	Mumbai	6E 319	06:00	07:10
Mumbai	Kolkata	6E 319	07:50	09:55
Kolkata	Mumbai	6E 324	11:20	13:55
Mumbai	Goa	6E 324	14:50	16:10
Goa	Mumbai	6E 323	17:10	18:25
Mumbai	Hyderabad	6E 254	19:50	21:10

With their good customer service experience and lower air fares, it is time to change the classification for IndiGo and SpiceJet from low cost carriers to value carriers, and while it might appear far fetched to some, SpiceJet CEO Sanjay Aggarwal indicated to me back in March, he is willing to consider merger with a competitor with an Airbus fleet of 20 plus.

If not an IndiJet or a SpiceGo in 2010, can we expect an alliance between these two airlines ?

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