IndiGo, once plagued by talks of bankruptcy, has experienced an impressive revival in recent years. Despite its turbulent past, the airline’s stock has surged by 60% in the past year and 30% in the last six months.
With a unanimous buy rating from industry experts, IndiGo’s remarkable turnaround can be attributed to three key factors: supply and demand dynamics, efficiency in crisis management, and strategic expansion and foresight.
Supply And Demand: Meeting The Soaring Air Travel Needs
In the previous financial year, domestic air travel in India witnessed an astounding 60% rise. Projections for the upcoming year indicate further growth of 8-13%, aiming to reach pre-pandemic levels. However, many airline companies were caught off guard by this surge in demand and failed to expand their capacity adequately.
IndiGo, on the other hand, anticipated the increased demand and strategically positioned itself as one of the few players ready to cater to the market.
The recent bankruptcy filing by Go First (formerly Go Air), one of India’s major airlines, has further reduced competition in the sector, leaving Tata and Indigo as the dominant players. This consolidation positions Indigo favourably, enhancing its prospects for sustained growth.
Efficiency And Crisis Management
IndiGo has demonstrated exceptional crisis management capabilities, which have played a crucial role in its resurgence. One notable instance was the Pratt & Whitney GTF engine failure fiasco, which affected both Indigo and Go First.
While Go First succumbed to the crisis and filed for bankruptcy, citing the engine issues as a significant factor, IndiGo skillfully negotiated with Pratt & Whitney.
Also Read: Did The IndiGo Crew Take A Mass Sick Leave To Apply At Air India?
As a result, Indigo secured better terms and compensation from the engine supplier, effectively mitigating the impact on its operations. This adept crisis management has bolstered investor confidence and strengthened Indigo’s reputation as a resilient airline.
Expansion And Foresight: Seizing Opportunities And Innovating
During the early stages of the COVID-19 pandemic, many airlines sought to cancel aircraft orders as uncertainty loomed over the industry. In contrast, IndiGo displayed astute foresight and maintained its commitment to accepting deliveries. This strategic decision allowed IndiGo to position itself for future growth and capitalize on emerging opportunities.
In a groundbreaking move, IndiGo recently became the first airline to place an order for 500 planes, signalling its confidence in the resurgence of the Indian airline segment. Additionally, the company is expanding its international operations by adding routes to underserved markets in Asia, particularly in China.
These expansion endeavours, combined with IndiGo’s operational efficiency, position the airline as the prime beneficiary of the anticipated turnaround in the Indian aviation sector.
IndiGo’s remarkable turnaround story showcases its ability to adapt, capitalize on market trends, and navigate through challenging circumstances. By accurately gauging supply and demand dynamics, effectively managing crises, and displaying strategic foresight in expanding its operations, IndiGo has positioned itself at the forefront of the Indian aviation industry’s resurgence.
As the company continues to leverage its strengths and capitalize on emerging opportunities, it is poised for sustained growth and success in the years to come.
Image Credits: Google Images
Sources: Outlook, The Economic Times, Reuters
Find the blogger: Katyayani Joshi
This post is tagged under: IndiGo, airlines, demand and supply, strengths, weakness, resilience, circumstances, efficiency, crisis management, turnaround, challenge, air travel, needs, resurgence
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