Wednesday, April 12, 2017

A look at the Indian aviation industry

Looking at the successful Southwest model, I was intrigued to do some research on the state of the aviation industry in India. Two stark examples stand out as successful and unsuccessful companies in the Indian aviation industry, namely Indigo and Kingfisher, respectively. Both companies roughly started at the same time. However, today Indigo has close to majority share in the aviation industry, while Kingfisher is a shadow of its former self.

Indigo started as a low-cost airline, and the company consciously decided to expand at a slow pace. The strategies that have been implemented over the years have stayed coherent to their strengths. Some of the reasons that have contributed to Indigo’s success are as follows:
  •     The airline has no added advantages such as luxury seating or on-board food. This reduces their turn-around time as compared to full service carriers. This also reduces the investment that they need to make in terms of time, money and crew on privileged passengers. It eliminates the expense spent on premium lounges at airports and works towards their profitability.
  •    It operates over a lesser number of destinations but with greater frequency. It maintained this strategy for the beginning phase of operations. Now, as the company is the singular company in the Indian aviation industry, it has started expanding slowly in the international sector as well.

The complete opposite to this situation is that of Kingfisher, owned by Vijay Mallya. The airlines bank accounts have been frozen by the Indian Income Tax Department in 2012, putting the airline in financially distressed times. Some of the reasons that have contributed towards Kingfisher’s failures are as follows:
  •    The primary reason was the continuous change in their business model. When the airline was launched, operations begun as an all-economy, single-class airline. However, within a year of operations, the airline shifted its focus towards being a luxury airline. Further, they had an aggressive strategic approach towards expanding internationally as well. This along with their weak decision to merge with Air Deccan prove the incoherence of Kingfisher with its original strategy.
  •    Another major factor towards their failure has been the lack of a stable head at the top. The company did not have an appointed CEO for a period of five years, during which operations were basically run by the owner Mallya.

In conclusion, having a strong strategy from the beginning is the defining factor of any company. A company succeeds only if it can effectively adhere to this strategy while still being adaptable to changing times. The right balance between the two needs to be struck in order to move forward. This brings us to the point of the “Power of Coherence” mentioned by Paul Leinwand and Cesare Maindari. Finding the exact fit between company capabilities and the product or service to be delivered is the make or break factor for any company. It ensures greater profitability, longevity in the market and sustained growth. 

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