Home / Companies / People /  We’re chasing a billion $1 ideas: IndiGo CEO

Mumbai: IndiGo president and chief executive officer (CEO) Aditya Ghosh speaks in an interview about the successful traffic record of the airline, which has reported a profit every year since 2009. Edited excerpts:

What did IndiGo have that was different from other airline start-ups?

The secret sauce is simple. We are founded by airline people. And we are run by airline people. The promoters understood the Indian opportunity. They knew what to do. More than that, they knew what not to do. (Co-founder) Rakesh Gangwal had experience in running a very large international airline (US Airways)... (Co-founder) Rahul Bhatia, on the other side, has built a business from scratch and kept his focus on the travel business in India... Both promoters trusted their people and encouraged them.

What is the secret behind this record result?

We are sticking to the LCC (low-cost carrier) model. We have stuck to a single-aircraft model. We have stuck to a single configuration. We focused on increasing asset utilization, increasing efficiency and cutting costs.

How do you maintain the low-cost structure? Especially in maintenance.

IndiGo has the lowest cost structure (among airlines) in India. It is also one of the lowest-cost airlines in the world... Regarding maintenance costs, when IndiGo buys equipment, it enters into a contract with original equipment manufacturers (OEMs). IndiGo has a power-by-the-hour contract with OEMs. As we keep flying more, we set aside a small amount towards manufacturers. We can afford to do so because of our underlying profitability. This give us a huge advantage of predictability. (OEMs monitor the usage of equipment they supply and charge the customer per hour of use.)

Will you be able maintain this operating margin of 9.4%?

It is difficult to say. The operating margin depends on jet fuel prices, currency exchange rate variation, airfare fluctuations, etc. As of today, we have the lowest cost of operations, excluding jet fuel. And this is comparable with the world’s low-cost airlines. As we scale big, IndiGo will have typical advantage of economies of scale.

Are you underexploiting the potential of the international market?

No. The international market is not bad. But given the choice, we would always want to look at the market that has more demand and less supply. The domestic market is still largely untapped. For instance, we had a Mumbai-Singapore flight on the international sector. We saw an opportunity where this asset can be utilized in the domestic market more profitably. We are focused on consistent profitability.

So what is next billion-dollar idea from IndiGo?

We are not actually chasing a billion-dollar idea. But we are chasing a billion $1 ideas that can deliver the same results. The airline business is not a sunrise business. It is the same old business. We need to drive this business to better results with a billion $1 ideas. Be it introducing boarding ramps or featuring IndiGo employees on the cover of our inflight magazine, there are a billion $1 ideas of innovation. We changed our seats into lighter seats to burn lesser fuel. There are no flashy celebrities to endorse our brand.

Are you the Emirates of Indian aviation—not acquiring any company, no alliance either?

Whether it is SouthWest or Emirates, all these successful airlines had a format. They did not deviate from that. It is all about focus. Emirates did not buy narrow-body planes. Likewise SouthWest did not buy wide-body after 40 odd years. Its is like Sachin Tendulkar, who debuted in 1989. His focus was to become the world’s best batsman. He did not want to become the best wicket-keeper or the world’s best bowler. He just wanted to become the world’s best batsman. He listened to the captain, who was half his age, without ego. And I hope, IndiGo will be focused on its fortress.

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