New Delhi: Everytime an IndiGo aircraft takes off in daylight, the pilot switches off the navigation lights located on its wing and tail tips. The reason: savings on the cost of changing bulbs. It’s such a minor detail and the saving so small that most airlines wouldn’t bother, but it’s taken seriously at IndiGo.
Leaving the lights on in daytime when they weren’t needed led to frequent bulb changes, explained one executive at InterGlobe Aviation Pvt. Ltd, which runs IndiGo, the country’s largest low-cost airline by passengers carried.
“You turn them off, their life goes up,” said the executive, who didn’t want to be named because he isn’t authorized to speak to the media. The idea is to cut avoidable expenditure even if the saving was minuscule. “If I can save Rs2, why not.”
Also See Effecting A Turnaround (Graphics)
IndiGo seems to be doing something right. In an airline industry stricken by high costs, excess capacity and competition that led to combined losses estimated at $2 billion (Rs9,260 crore today) in the last fiscal year, IndiGo posted a small profit, helped by cost reductions, capacity cuts and aircraft sales and leasebacks.
In the fiscal, considered to be the worst for the industry, the unlisted carrier earned a profit of of Rs82.16 crore, the first since its launch three years ago, according to its annual submission to the Directorate General of Civil Aviation (DGCA). The profit, on revenue of Rs1,876.35 crore, compared with a loss of Rs212.28 crore in 2007-08 and Rs174.13 crore in 2006-07. IndiGo declined to comment on its financials for this story.
Click here for a slideshow about Indigo’s cost-cutting measures
To be sure, the Gurgaon-based airline will need to maintain its profitability in a money-bleeding industry that’s trying to weather the impact of the economic downturn that curbed air travel. Operating profit in the last fiscal was just Rs18.10 crore, meaning that the bulk of the profit came from items such as aircraft or engine sales and leasebacks.
A tight control on costs is helping the airline, which made world headlines with a $6 billion order for 100 Airbus A320 aircraft at the 2005 Paris air show, the year before it launched operations.
For instance, savings on fuel, the biggest expense for airlines. At other carriers, pilots decide what quantity of extra fuel to take on a flight. At IndiGo, the amount of fuel is determined by computer-generated data based on the three-monthly average of fuel expended by flights on a particular sector and possible contingencies such as weather-related delays.
High fuel costs forced it to increase fares by 30% and reduce capacity by 26% in the last fiscal. IndiGo returned five older planes it had taken on short leases, according to a presentation made by the carrier to aircraft financiers earlier this year and previewed by Mint. In its first year of operations, the carrier had a fleet of eight A320s to which it added nine and seven in the following two years.