2005 in India flights are used only by the rich people it was a dream for a middle class person or a poor person to travel on flights but seeing this Rahul Bhatia and Rakesh Ganguwal two men came together with the idea of making flights available not only to the rich but also to the poor as well as the middle class. A company was established following the concept of Indigo Airlines India Kingfisher and Indigo Company were started almost at the same time but by 2012 that is in just seven years Kingfisher Company had lost 700 crores of rupees while Indigo Company had made a profit of 787 crores of rupees.and big companies like Air India and Vistara It has become the largest airline company in India but if we look carefully at these two companies one teaches us how to do business and the other teaches us how not to do it more than 90 percentage of people in India still think that traveling by flights is a dream because of ticket prices that is with bus and train tickets compared to that flight tickets are almost ten times more expensive so any company that wants to do aviation business in India has to give tickets to the poor at the lowest possible price.
In fact it is very difficult because they have to spend 50 percentage of the cost of running a flight on fuel alone. In the remaining 50 percentage they have to give salaries to the stop maintain the flights spin the business pay fees to the airports, buy new flights, do the marketing for the brand and also earn profits from it many companies like Kingfisher and team have sunk in losses of thousands of rupees and closed their business completely, but Indigo company is completely opposite to them today I am going to tell you how it became possible and behind this the genius business implemented by Indigo Company. In order to do business many people think that a good idea needs to be invested in crores but before all that you should analyze the business that you start as an index and identify the gaps in the market. Come and start your business while fully feeling the gas that you have identified why I am saying this is that before Rahul Bhatia and Rakesh Ganguwal started Indigo Airlines they did a complete research about this sector and till then companies like Air India and Sahara Airlines were doing airline business in India.
Because they are running at a loss and knowing the reasons for it completely they started the Indigo company while doing it on the person. But now let us see what are the problems they have identified and how they have solved them. Problem number one is that in 2005 only 2 percentage of the population in India used to travel by flights. The thought process of the business people was that they provided food drinks entertainment and luxury facilities to the passengers traveling in their flight with the idea of giving them a good travel experience so the price of the flight tickets was very high and on the other hand who was talking about Locos Aviation at that time. They did not think much because the actual aviation business is very costly and they thought that giving tickets was almost impossible so Rahul Bhatia and Rakesh Gangawal noticed all this and designed Indigo as a loco stay and wanted to provide aviation services to the people at a low price but this is not so easy and It is also very risky and to reduce the risk they both implemented a strategy together with the same sales and lay back model.
Which means that for 25 years the planes manufactured by the Airbus company around the world have met with a lot of accidents so due to this the demand for the flights of this company has decreased and the sales have fallen so which company is in losses. However in order to get back customers they give any amount of discount to bring their business back into shape and after noticing this Indigo Company went to Airbus Company and ordered about 100 flights with an offer of 50%. Many people thought that this was a high risk deal due to the crash of Airbus company planes but this is where IndiGo Company implemented their sales and lease back strategy they sold 100 planes bought from Airbus company at a discount price to another company called DOC Aviation at a good profit and then took them back to run the flights. This is really a genius strategy because if you buy flights from Airbus at a discount and sell them to document then IndiGo will get a commission of a few crores of rupees and in addition to this the cost of maintenance and repair of flights will be cut in the future saving a lot of money to IndiGo.
Do you understand that if they just pay the money to take the flights and run them problem number to ticket pricing, in order to do cost aviation business in a country like India you have to provide flight tickets at a lower price than all the airlines companies in the first market, but here Indigo company has implemented a strategy. That is in general flights to any two places in India take a maximum time of three to four hours, so providing food alcohol and entertainment to the passengers for these four hours is not so urgent so Indigo company does not provide any extra immunities in their flights to reduce their ticket prices stopped providing means that all these things that you get in the flights will cost you money and if you cut all the money the airline company will collect it from you on the flight tickets. It also tries to provide the flight tickets at the lowest possible price without offering it for free. This has two major advantages one is that the price of the flight tickets is reduced and the other is that by avoiding food and drinks, the weight of the flight is reduced and the fuel efficiency is increased most of the companies follow point to point model to transport their passengers from one place to another place that is if you want to go from Hyderabad to Mumbai then take one flight from Mumbai to Delhi another flight and another flight from Delhi to Kolkata how do you travel between the two places those who run a separate flight is called point model but in this model they have to use a lot of flights which means that automatically more flight cost and the operation cost of flights also increases so observing all this Indigo company has replayed the hub model in place of this point model.
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