Microeconomics
Microeconomics
Microeconomics
AIRLINES:
MONOPOLIZING
INDIAN SKIES
20
15
10
5
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Years
INDIGO - UNIQUE
SELLING PROPOSITION
• IndiGo offered the lowest airfares and
professional customer service, enabling
India’s middle class to afford air flight.
• Efficiently reducing flight delays, ensuring
more than 95% on-time performance in
arrival and departures, meeting its tagline
"On-time is a wonderful thing".
• Dealt with cancellations, with having lowest
flight cancellation rate (just 0.38%)
• Product homogeneity and focused on one
type of airplane
INDIGO - PROFITIBALITY
STRATEGIES
• Dynamic Pricing (DP) allowed prices for the same service to change according to
customer, time, aggregate demand, and other situation-specific parameters.
• Customer loyalty was minimal due to product homogeneity in aviation sector, so price
discrimination through DP was to shift loyalty of customers in order to attain a higher
occupancy rate.
• IndiGo leveraged the benefits of DP to take advantage of highly price-conscious customers
in the Indian aviation market, where demand was still inelastic given the low penetration
rates.
• The efficacy of IndiGo’s DP contributed to its rising market share and average operating
revenue per passenger kilometer (an increase of 68% in its operating revenue per 1,000
passenger kilometers since 2007–08).
INNOVATIVE AIRCRAFT MANAGEMENT
STRATEGY
Company B
100(High) 90(Low)
100(High) 3 Lakhs, 3 Lakhs, 50,000 , 4 lakhs
Company A
90(Low) 4 Lakhs, 50,000 1 lakh, 1 lakh
Resulting in:
• Price Rigidity
• Temptation to collude
• Incentive to cheat on collusive
agreement
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