INTRODUCTION

IndiGo is a private, low-cost airline based in Gurgaon, Haryana, India. Since commencing operations in August 2006, it has established itself as one of India's leading airlines using its model of efficient, low-cost operations and by attracting customers with low fares. The parent company of the airline is InterGlobe Enterprises. It lives with a mission statement of "To empower every Indian to take to the sky" and have vision of putting every service on par for everyone and to be the best airline in India by providing the values to the customer in form of Affordable fares, On time performance, Hassle free services Currently indiGo has a market share of around 19.9% in the low cost airline industry. And as established in earlier reports indiGo is a market leader in lcc segment. IndiGo enjoys a high brand awareness and brand equity besides the fact of it being only 5 year old company. Highly efficient management and streamlined operations help it in delivering low cost promise along with on time performance. IndiGos growth trajectory is attributed to Continuous innovation to improve on non-price factors. But Benefits of the innovations implemented by IndiGo to provide better services to the customers are short-lived, as these can be easily imitated by the competitors. Facing threat from international players entering in the domestic market, There is a need to further explore the international market and in Indian cargo market.

Service Mix
IndiGo is characterized as a service industry under the category of service industries and companies. It sells transportation as their core service offering.

Characteristics of IndiGo services

Intangibility
A major and important characteristic of services distinguishing it from goods is it being intangible i.e. it cant be seen, tasted, felt or heard. Services provided by indiGo i.e. transportation cannot be inventoried, patented or displayed. A traveler cannot see the results before traveling by the indiGo airlines. But they can look for evidence of quality by drawing inferences from following

Place- the interiors of plane , food quality served ,waiting lines etc. People- staff both on board and at check-in counters Equipment- aircrafts, checking equipments Communication material-printed brochures, hoardings, website etc. Price- value deliver by price Symbol- name and logo depicting the vision and mission

TANGIBILITY SPECTRUM

Tangible dominant

Intangibl e dominant

Inseparability
Services provided by IndiGo cannot be separated from its provider. Services are first sold and then produced and consumed simultaneously. Thus, interactions between IndiGo airlines and travelers are important and are special feature of its services.

Variability
Quality of services deliver by IndiGo depends highly on who provides them, when and to whom, thus making it highly variable. Travelers are aware about the variability and often talk to each other before choosing a airline.

Perishability
Since airline services are intangible thus cant be inventoried so perishability is a problem when demand fluctuates. For instance indiGo may need to have more frequent flights during the time of holidays and would need more aircrafts in that phase but since holiday phase is short lived in the remaining phase of non holiday or not high demand will lead to redundancy and resource wastage.

Extended 3 Ps
People
Good employee relationship is a key factor to sustain competitive advantage. IndiGo provides several incentives to its employees. As per the news article published in The Hindu Business Line IndiGo officials had claimed that even during recession they have been seeing a healthy growth in passenger numbers and had no plans to defer delivery of any of the 100 Airbus it had ordered. Hence, it is clearly evident from the above statement that IndiGo is optimistic and growth-oriented organization. By not downsizing their staff, IndiGo instilled confidence in its employees. Stated in the same article were some differences in the approaches adopted by various airlines at the time of recession, they are: At a time when several domestic airlines are looking to prune their staff strength, IndiGo, is on the lookout for more pilots, cabin attendants, customer service and airport service agents. In the recent past, both Kingfisher Airlines and Jet Airways have asked their staff to leave. While Jet Airways offered a voluntary retirement scheme to more than 300 of its staff, it was also planning to lay off about 1,900 of its staff. Post-recession Kingfisher announced that 300 employees have parted ways with the company. These statements reflect that IndiGo had taken a positive approach while dealing with its loyal employees at the time of economic slowdown. IndiGo has yet again been voted as one of the Indias Best Companies to Work for for the year 2010 in a study done by Great Places to Work Institute in partnership with The Economic Times. This is a hat trick for IndiGo.

Physical Evidence
IndiGo Fleet - IndiGo has a fleet 39 Airbus 320s with 259 daily flights connecting 26 domestic destinations in all. The carrier is likely to introduce a slightly larger A321 aircraft to its fleet from 2012. Aircraft - All the planes have exactly the same configurations, having the same engines, same number of seats in one class configuration. The planes are well-maintained and clean. The passengers are required to dispose off their own garbage before landing, into a big plastic bag which is passed around by the crew. Refreshments - Offers an assortment of vegetarian/non-vegetarian sandwiches, flavored cashew nuts, cookies, soft drinks and juices for sale onboard. Drinking water is provided free of charge on all its flights to all customers. Food can also be carried on board, and the allowed food items include: cold snacks, non-alcoholic drinks, snack bars and biscuits. For the convenience of customers, messy, oily or smelly food items are not allowed onboard.

Additional value adds Offers a really amazing collection of enviable in-flight goods at very compelling rates. Endows the fliers with a choice to choose seats and pre assign with extra leg-room on additional charges. On time arrivals is the key differentiating factor for IndiGo Airlines. Engaged many Travel web-portals and regional travel agents with incentives like booking commissions, etc, thus making booking process easy. Collaboration with hotels: Mumbai-based hotel chain operator Sarovar Hotels and IndiGo Airlines announced a marketing tie-up for frequent travellers. The arrangement will allow guests staying at select Sarovar Hotels across 26 destinations in India to avail a 10 per cent discount on their next travel booking with IndiGo.

Process
IndiGo has tried to attract customers with more than just low fares. An important factor is its on-time performance - much higher than its other rivals. IndiGo has a fast turnaround time of 25 minutes which is very less as compared to other LCC airlines. This has helped the airline gain customers. To support high on-time performance, IndiGo keeps implementing new and innovative ideas to increase the quality of customer service. Recent example is: IndiGo has roving check in counters where passengers with only cabin baggage can check in with an IndiGo official with a handheld device, rather than lining up at the check in counter. Tickets can be booked through online reservation system which cuts down the commission paid to intermediaries and travel agents. Also there is a direct IVRS (Interactive Voice Response System), where tickets can book through phone immediately and a booking number is provided instead of a ticket. Refunds: In case of delay or cancellation of the flight; the passenger shall have the right to choose a refund; or a credit for future travel on IndiGo; or rebooking onto an alternative IndiGo flight at no additional cost subject to availability.

PRODUCT DETAILS
Service provided by Indigo airlines may differ from its competitors on various paramaters. The following table shows the features of the product of IndiGo and its competitors.

Features Go Aircraft

Indi
Airbus A320-200

Goair
Airbus A320, European consortium , Short to medium range airliner

Spicejet
737- Boeing 800s Boeing 737-900ER Q400 NextGen turboprop aircraft from Bombardie r 34

Jetlite
Boeing 737700 Boeing 737800 Boeing 700800W

Total in Service Seats

45

19

19

180

180

189,212,78 respectively

144,186,186 respectively

Engines

IAE V2500

CFM56-5

CFM567,CFM567B24 0.78,0.785Mac h

CFM56-7B

Cruising speed Length

0.82 Mach

0.82 Mach

0.85 Mach

37.57m

37.57m

39.5m,42.1m

33.6,39.5,39.5m

Height

11.76m

11.76m

12.5m

12m

Wheel base

12.65m

7.59m

8m

7.50m

Maximum fuel capacity

23860 litres

23860 litres

26.2,29.6 kl

2300 litres

Product Life Cycle

Another approach to examine product mix, in our case service mix, is by looking at different stages of Products/Service life cycle. Every Product/Service introduced has a specific life span. This life span is divided into different phases mentioned below. Phase 1: Introduction stage of product life cycle. Phase 2: Growth stage of product life cycle. Phase 3: Maturity stage of product life cycle. Phase 4: Decline stage of product life cycle. Introduction stage of product life cycle During an introduction phase of product life cycle, there are many costs involved in order to introduce the product into the market. For example, new product development cost (also termed as NPD), expense include promotional activities, high operational costs etc. In this phase the product is new and even suppliers of the raw material for the product are not very confident about the success of the product. Growth stage of product life cycle As the introduction stage of product life cycle ends, the product has spent considerably moderate time into the market where customers / consumers get familiar to the product and start buying the product/service (or consuming it). As the product is now into the market it becomes more strengthened and faces more intense competition. This competition now offers greater choice to the customer in the form of different product type, packaging and price. At this time the company soon starts operation on economic levels. To remain competitive over a period of time the firm initiates product improvement or modification in the product to stay in the market, but profits taper off at the end of this phase. Maturity Stage of product life cycle There can be ample number of reasons for product getting mature. For example, entry of a new product that may be offering better quality at a cheaper price which has induced the consumer to shift. This calls for some great marketing strategies that could revitalize the product so that the product stays in the market. But at this point, its difficult to survive; as there are new entrants that are now offering better priced products. This maturity often

leads to death of the product and this is the time when company is incurring losses due to its production (no sign of profits).

The Rise of IndiGo

(IndiGo is in Growth Stage, of its PLC)

From its inception (2006) to 2008 was its introduction phase of product life cycle there were many costs involved in order to introduce the service into the market. For example, new product development cost (also termed as NPD), expense include promotional activities, high operational costs etc. During this phase no profits were made. IndiGo is in growth phase as they achieved their break even in 2008 and now are making profits and is in fact the leaders in LCC market. Despite the decline in the aviation industry and global economic slowdown, IndiGo has accelerated its growth rate. Also, IndiGo being a new entrant has managed to become a cost leader in its sector Since 2008, when the company booked its first profit even as high fuel prices and the economic downturn ravaged its competitors, IndiGo's net income has grown more than five times from a shade under $20 million to more than $120 million.

After the $15.6 billion purchase of 180 passenger jets from Airbus, IndiGo topped stateowned Air India to become the country's second-largest carrier matching liquor baron Vijay Mallya's full-service Kingfisher Airlines with an 18.6 percent share of the market (figures for December, 2010)

Current Scenario:
Comparative study of Aviation Industry in India During the last one decade the civil aviation sector has grown at a phenomenal pace and India has emerged as the 9th largest civil aviation market in the world. The following data shows us the increase in demand for air-travel over the last 10 years:-

(Source: Directorate General Civil Aviation)

Analysis of capacity and demand on a year on year basis showed that there is a YOY increase in both years .The growth rate of demand has been consistently higher than capacity growth rate in the year 2010.

Growth rate of IndiGo

The Annualized growth rate has been 14.21%.Infact the number of passengers using domestic airlines increased at the rate of 18.7% from 2009 to reach 520.21 lakh in 2010. As mentioned above there are 15 scheduled airline operators in India today. As per the latest figures, the market share of these airlines is as follows:-

Market Share of different airlines for the year 2010

(Source: Directorate General of Civil Aviation)

Passenger Load Factor (PLF)

For identifying the most successful strategies, we have taken the two top player from both the segments (Low Cost: IndiGo & Premium: Kingfisher Airline) and done an extensive research on the strategies followed by them. The passenger load factor (PLF) of an airline, sometimes simply called the load factor, is a measure of how much of an airline's passenger carrying capacity is used. This factor is used for measuring the ability of airlines to attract customers. By obtaining the data of all the airlines for the past 3 years we have made the following chart:-

The analysis of the above figures gives us the following two important insights:1) High load factors for the low cost airlines. 2) During Recession noticeable decrease in demand

Airline Wise On-time Comparison(2010)

About 56% of the delays in 2010 were reactionary delays and 13% were caused due to weather conditions. Also as clearly evident the two market leaders Jet Airways & Kingfisher have a high on time performance.

Product/Service portfolio

Product/Service portfolio consists of all the product lines and items that a particular seller offers for sale or provide as a service.

Width
It refers to the number of different product lines the company carries .Since, IndiGo airlines is a service provider and there is no product apart from airlines, we have categorized the width into domestic and international services.

Length
It refers to the total number of items the company carries within its product lines. In indiGo case it refers to the various destinations covered by it under both the heads of domestic and international.

Depth
It refers to the number of versions offered of each product in the line. For indiGo multiple flights on different timings for same destination refers to as depth. (as shown in diagram below )

WIDTH

DOMES
26 DESTINATIONS LENGTH DELHI MUMBAI CHENNAI Morning SRINAGAR GUWAHATI 6:40 ,8:10,9:30 am Etc. Afternoon

INTERNATIO NAL
4 DESTINATIONS SINGAPORE MUSCAT DUBAI BANGKOK

Night

12:15,2:45pm 5:15,6:20 pm 8:50pm,10:05 pm

Evening

BRANDING
IndiGo promotes the below three things majorly as part of its advertising programme1) On-time performance 2) Affordable fares 3) Hassle free passenger experience. IndiGo doesnt spend a huge amount on advertising. It focuses on buzz marketing. Business + branding = buzz IndiGo has become the kind of brand that spawns customer appreciation pages on Facebook, an unlikely acclaim for an Indian airline where service-oriented brands usually get flak for failures, not fans for their flair. For advertising, they have hoardings at airports with focus on Best on time performance. They have collaboration with multiplexes in major cities to promote the airline and its special offers. It also uses print media for advertisements to target the urban population. IndiGo describes the target consumer as not a demographic but a psychographic one. The brand as having an abundance of crossover appeal.
DEPTH IndiGo uses plenty of young, urban style cues, demonstrating an abiding respect for the H fundamentals while indulging the cool quotient.

Step-less stairs, handicap-accessible boarding ramps, q-buster scanners for passengers traveling without check-in luggage, are all on the manifesto service card. IndiGo luggage stickers read Fragile over a little heart-shaped graphic, which very much appeal to the kids. IndiGos airsickness bags urge the passenger to "Get well soon" -- a device adapted by Jet, whose bags now also ask you to "Take care." With conveyor belts and assembly lines and workers indistinguishable in their uniform spiffiness, the ad projects assembly line efficiency. Secondly, the swell bell-hops, sexy receptionists, slick executives and smiling airline crew are more a montage from midcentury London and Paris than a reflection of India 2010. IndiGo promotion also involves a local flavor by promoting in regional languages in respective sectors. It has also got collaboration with consumer banks, credit card companies, hotels, ticketing websites to promote special offers, discounts and cash backs. IndiGo focuses on offering differentiated services that people actually want. As a result, word of mouth marketing works in its favor.

IndiGo already has the lowest cancellation rate among domestic airlines in 2010. It was also close to the top in on-time performance, and thus, has already conquered the low-cost carrier stigma. Fast growth may not be sustainable without some brand building exercises. The airline could concentrate on surviving the tough times which the industry is facing and then once the environment gets better then should indulge in brand building exercises.

Indigo has recently come up with Indigo Plus which allows customers to preselect their inflight meal, upside baggage and choose seats in advance for an additional fees. Customers can choose from vegetarian or non-vegetarian meals. They can select their seats in advance and avail additional baggage allowance of 5 kgs making flying with Indigo a memorable and hassle free experience.

Brand Equity
IndiGo is the most reputed low cost carrier due to the following reasons:

On time arrivals is the key differentiating factor for IndiGo Airlines. IndiGo keeps implementing new and innovative ideas to increase the quality of customer service. Recent example is: IndiGo has roving check-in counters where passengers with only cabin baggage can check-in with an IndiGo official with a handheld device, rather than lining up at the check-in counter. It gives the customers the freedom to carry their own eatables and snacks on board. Compared to the direct competitors, that is, the other low cost carriers like SpiceJet, Jetlite, etc. IndiGo offers the lowest airfare.

Branding/Promotional strategies of competitors of IndiGo

SpiceJet
Marketing Strategies SpiceJet has a marketing strategy that focuses on word-of-mouth marketing, supported by print and Internet media initiatives. To build further on its branding value, SpiceJet has introduced on-board merchandise sales such as goggles, airplane models, perfumes, caps and watches. Sales of branded merchandise will also be available through the company's website. While there is stiff competition in the low-cost carrier market in India, the competitive edge for SpiceJet lies in the quality of service offered during the flight. This has resulted in

42% repeat flyers, 45% of business travel and over 90% of passengers recommending the airline through word of mouth.

GoAir
GoAir is in the process of rebranding its airline. In an attempt to align its strategy to the recent trends in the environment, GoAir announced plans to trial a premium section, " Go Comfort". This strategy is as part of its effort to re-brand itself as a "value carrier. GoAirs new Go Comfort class aims to encourage repeat business travel as most of the travelers are repeat travelers.

JetLite
Jetlite undergoes a number of promotional activities like offering free tickets, concessional fares for students, Jetlite surprises and corporate deals. Recently, it also had unveiled a new uniform for its staff as part of a comprehensive brand experience strategy.

Pricing structure
Prices determined by the LCC and IndiGo are more or less same as the factors for setting up the ticket fares are similar for each carrier. Variation occurs only because of the average seat capacity, load factor and average mileage of the aircraft. Others factors have little influence on the base fare for the LCCs. Depending upon the average price computed, each carrier adopts some pricing strategies. For LCC segment, again the pricing strategies adopted are similar in nature. Below is the tabular representation of the average ticket prices of the major LCCs Low cost carrier IndiGO SpiceJet GoAir JetLite Average Price(Rs.) 2202.57 2631.59 2511.56 2746.31

Components of pricing considered while determining initial price

During price determination, certain components of pricing need to be taken into consideration. These components are: Base fare User development fee(based on airports) Air fuel surcharge(variable on ATF prices) Passenger service fee Load factor(average seat per mile) Ticket booking prior to travel based on number of days

Factors considered during price determination(LCC segment)

These are the set of factors which are considered during setting prices. Below is the list of these factors. 1. passenger service fee Rs. 225

2. fuel surcharge cost a. ATF price 58,578 per kilolitre b. Average seat capacity 190 c. Load factor 0.78 d. Average mileage 4.06 l / km e. ATF cost per passenger 2253.12 f. Crew members (2 pilots + 4 Air hostess) 6607.14 g. Cost per passenger 44.89 h. Overall fuel surcharge Cost per seat 2523.01 1. Base fare: minimum base fare of Rs 101 which would change based on the days booked prior to travel 2. Service tax on base fare

Factors considered during price determination(indiGo)

These are the set of factors which are considered during setting prices. Below is the list of these factors. 1. passenger service fee Rs. 225 2. fuel surcharge cost a. ATF price Rs. 58,578 per kilolitre b. Average seat capacity 180 c. Load factor 70%(125-135 occupancy) d. Average mileage 2.9625 L/Km e. ATF cost per passenger f. Crew members (2 pilots + 4 Air hostess) 5714.29 g. Cost per passenger 45.35 h. Overall fuel surcharge Cost per seat 2202.57 3. Base fare: minimum base fare of Rs 101 which would change based on the days booked prior to travel 4. Service tax on base fare

The following table shows the determination of price of different LCC in the airline industry and the average in the industry. Distance taken is from Delhi to Mumbai

ATF price (Rs.) Distance between Mumbai and Delhi (Km) Average seat capacity Load Factor Net Occupancy Average mileage (l/km) ATF Cost per passenger per km Passenger Service Fee (Rs.) Hourly Salary of Crew Members (2 pilots + 4 air hostess) Cost per passenger Total Cost per seat (Rs.)

INDI GO 58.7 5 1400 180 0.70 126. 00 2.96 1932 .22 225 5714 .29 45.3 5 2202 .57

GoAir 58.7 58.75 5 1400 190 0.88 167.0 1 4.80 2362. 11 225 7428. 57 44.48 2631. 59 1400 180 0.84 151. 20 4.12 2241 .20 225 6857 .14 45.3 5 2511 .56

Spice Jet

Jetlit e 58.7 5 1400 210 0.69 144. 90 4.36 2476 .94 225 6428 .57 44.3 7 2746 .31

Averag e 58.75 1400 190 0.78 147.28 4.06 2253.1 2 225 6607.1 4 44.89 2523.0 1

IndiGo started its operations in August 2006, it has established itself as one of India's leading airlines using its model of efficient, low-cost operations and by attracting customers with low fares. Since its inception it has adopted a mix of pricing strategies. Some of the strategies have evolved over time. These strategies are also influenced by the segments that IndiGo is catering to and also change as the product passes through its life cycle. After evaluating the segment size and growth, segment structural attractiveness and company objectives and resources, IndiGo has been targeting the following differentiated segments.
1. Tier 1 and Tier 2 cities Considering the segment size and growth rate, IndiGo

targets the Tier 1 i.e. Metro cities with a population over 4 million like Mumbai, Delhi etc and Tier 2 i.e. the Mainstream cities with population of over 1 million like Pune, Kochi etc. Urban population is growing at a tremendous rate and according to Asian Development Bank; by 2030 half the population of India will live in cities. This makes it an attractive market. 2. Lower middle class and upper middle class The continued increase in income of middle class and in volume of affluent sections of the society (as seen in PESTEL analysis) has made the strivers and the seeker section of the income segment an attractive opportunity. The middle class strives towards a better standard of living which was till very recently, was confined to the upper class and IndiGo pursues this aspiration factor of the middle class mentality

by providing them the satisfaction of travelling in airlines at a price comparable to that of AC 2nd-tier trains, thus acting as hedonic product as discussed in the first phase of the project. Source Brandalyzer
3. Cost-conscious customers IndiGo targets the cost conscious customer base which

was previously using other cheaper modes of transport like train, by providing benefits of travelling on an airline at price compared to that of train. Customers with budget constraints choose to travel in no-frill IndiGo as opposed to those who prefer service over cost and travel in full service airlines despite the high cost. These customer perceive IndiGo as a utilitarian as elucidated in the interviews taken by us in the first phase of the project.
4. Time-constrained customers Customers seeking to minimize travelling time, hence

travel by airlines, forms the benefit specific target for IndiGo.

5. First-time Flyers As previously discussed in the first phase of the project, airline

travel by serves as an aspiration for first time flyers who still associate flying to the elite. Hence this ego-expressive perception of IndiGo makes this segment a lucrative target. Based on the above targeting, IndiGo has adopted the following pricing strategies to cater to the needs of targeted markets: New product pricing strategies Here, it is critical to choose a strategy as the product is in its introductory stage. So, companies bringing out a new product face the challenge of setting prices for the first time. There are two broad categories to choose from: - market-skimming pricing and market-penetration pricing. All the Low cost airlines adopted the market penetration strategy. In order to maintain low operational costs, LCC has taken into account a few parameters:-No free in-flight food service - No advance seat assignment. - No frequent traveler lounges at the airports - No interlinking agreement with other airlines - Introduction of paperless/electronic ticketing. They save costs on printing, mailing and processing tickets as passengers are issued a booking number. - Competing primarily with ground transportation - Lean operational staff - It has saved on distribution costs by disinter mediating travel agents and central reservation systems and selling through internet and call centre - They also work with minimum number of flight crew members, thereby reducing internal costs.

IndiGo also adopted market penetration strategy. This strategy was adopted keeping in mind the lower and upper middle class (strivers and seekers section of the income segment) and also the cost conscious customer. IndiGo set a low initial price in order to penetrate the market quickly and deeply-to attract a large number of buyers quickly and gain a large market share. IndiGOs low ticket prices were attributed to the following: It operates only the Airbus A320 family of aircraft in its fleet in order to reduce operational overhead. It generally purchases new aircraft in bulk and enjoy discounts. Thus, reducing fixed costs. To keep fares always affordable, IndiGo has designed a clean, comfortable and reliable airline without costly frills that put upward pressure on fares IndiGo reduced its turnaround time to 25 minutes which is very less as compared to other LCC airlines. This helped the airline gain customers quickly. Indigo follows an APEX (Advance Purchase Excursion Fare) pricing system which is special fares valid on economy class on specified sectors. They are much lower than the normal fares. But there are certain conditions for which APEX would be valid, like: The ticket is purchased and bookings for departures at either end are made at least 21 days in advance. The minimum gap between departures is of one to six weeks (typically two weeks) The maximum gap between departures is of 12 to 24 weeks (typically 16 weeks). There are no stopovers. Cancellation of an APEX fare trip usually results in higher than normal penalties. IndiGOs business model is that of a classic no-frills airline. One type of aircraft (brand new A320s), one route mission (domestic India), one class of service, strong focus on operational integrity (on time), simple processes (hassle-free), affordable fares, no frills. This kind of focus and simplicity helps keep its costs down, and fares low. But they spare no expense in providing the basics of comfortable, safe, hassle-free, on-time travel and thats what helped them to be voted the best, and become the largest low-fare carrier in India. IndiGO has been on a growth trajectory since its inception. To gain a competitive edge, till date indiGO set prices based upon market penetration pricing to explore the untapped domestic and international markets. Along with market penetration strategies, it has also adopted few more pricing strategies to explore newer markets and spread its reach and catering to all the targeted segments simultaneously. Source: http://www.dnaindia.com

Price adjustment strategies

After a company has set a base price for a product/service, it also needs to adjust the price to adjust for customer and situational. LCC follows segmented pricing for adjusting prices. Here a company sells a product/service at two or more prices, even though the difference in prices is not based on differences in costs. In aviation industry, segmented pricing is called yield management. This practice ensures that companies will sell the right product to the right customer at the right time for the right price. Airlines routinely set prices hour by hour even minute by minute depending on seat availability, demand and competitor price changes. Thus, the price paid for a given seat on a given flight may vary greatly depending not just on class of service, but also on when and where you buy the ticket .One important aspect of segmented pricing is that it should reflect real differences in customers perceived value. Especially, LCC must be careful not to treat customers in low price tiers as second class citizens. One such instance of segmented pricing is price determination of base fares based on the day of booking prior to travel is as mentioned below: More than 15 days prior to travel (with other components remaining fixed) base fare would vary from Rs. 101 to Rs. 501. Within 14 days of travel, base fare could reach up to Rs. 1500. Within in 7 days of travel, the base fare could reach up to Rs. 4500.

IndiGo airlines have adopted the yield management pricing being followed by the LCC segment. It also determines the prices on an hour to hour or minute to minute basis depending upon the seat availability, demand etc. and with this strategy it is catering to the needs of the cost conscious customer. But it maintains the promise of on time performance, hassle free services and affordable fares. Successful implementation of these pricing strategies in IndiGo can be attributed to:

Heavy investment in the training of its staff and its aircraft fleet. Reducing the turn-around time to 20-25 minutes compared to the industry average of 30 minutes. Using lightest seats in its aircraft. IndiGo has hardly advertised and indulged in brand building activities thus another way of saving on costs. Its success is attributed to word of mouth marketing and repeat customers.

Another important price adjustment strategy, used by LCC has been reference prices which is one aspect of psychological pricing. Reference prices are those prices which buyers carry in their minds and refer to when looking at a given product. This pricing strategy is focusing on the first time flyers for whom airlines is an aspirational product. They associate flying with elite and use 2nd AC tier rail services as a reference price. Thus, LCC is slowly eating away the share of the train revenues. Also, given the comparable prices, LCC offers less time to travel and so is becoming the first preference for the consumers. A ticket on

India's low-cost carrier (LLC) has made flying, once confined to the rich and elite, an affordable reality for the hordes of Indians travelling across the country.

IndiGo has taken advantage of this segment. It has spread the reach of LCC by introducing flights in second tier cities like Mangalore hence making it accessible to people of the smaller cities.

Comparison of LCC fares for different days

14th October, Friday

15th October, Saturday

16th October, Sunday

As seen from the screenshots, there is not much difference between the prices of air tickets on weekdays and weekends. The prices of tickets generally go up during peak hours.

NOTE:
Also from different fare sheets and tariff sheets provided by the airlines,we have taken up a route i.e between delhi and Mumbai to show how prices fluctuate and how dynamic pricing is observed. Delhi-Mumbai
Service Provid er AP AP 14 14 Fa Fa re re A P 7 Fa re Re gul ar Far e4 Re gul ar Far e5 Re gul ar Far e6 Re gul ar Far e7 Re gul ar Far e8 Re gul ar Far e9 Re gul ar Far e1 Re gul ar Far e1 Re gul ar Far e1 Airli ne Fuel Char ge

1 INDIGO 70 1

2 15 00

3 20 99 25 99 33 99 38 99 45 99 57 99 68 00

0 89 99

1 98 00 10 29 9 10 40 0

2 11 69 9 11 59 8 13 85 0 14 99 5

2600

SpiceJe t

90 0

14 99

22 99

25 99

30 99

35 99

40 99

45 99

50 99

75 99

3200

Jetlite

20 0

15 15

18 00

21 00

25 00

33 50

42 50

60 50

90 75

2900

GoAir

75 0

90 0

14 00

22 75

26 05

34 05

46 05

59 55

69 55

79 55

92 05

2700

The following graphs shows the fare rates for different LCC carriers booked at different periods of time. The fares are pretty much dynamic in nature and are governed by the demand and supply situation. The earlier one booked, the lower was the fare. For example, fare1 which is booked 14 days earlier is least and subsequently as the booking is done later the fares rises. This is also known as APEX-Advanced Purchase Scheme.

Also the group found out that how different online booking websites and travel agents play a part in a varying the price of a ticket and the degree of their influence on the price of a ticket.

Websites like makemytrip.com, yatra.com etc.

Travel websites get their commission when there is a sale of tickets in bulk. With our telephonic conversation with makemytrip.com and clear trip as our study sample we found out that they get a commission in the form of cash, free tickets and gift vouchers on selling of bulk tickets say for example they get 5 tickets free on selling 150 tickets for indigo airlines. In this case cost of tickets does not make a difference to the commission. On promotional front there is another strategy followed by indigo airlines. Say, a ticket costing 2000 at indigo airline website may cost you 1900 on makemytrip.com. The difference of rs.100 is bear by the indigo airlines.

Travel agents
Travel agents book tickets on commission basis. They get a fix percentage of amounts of ticket sold to the passenger from the airline company. The commission charge is not passed on to the consumer and is solely beard by the airline company. From our field work we have gather information from various travel agents and found out that they get a 2%-3% commission on domestic as well as on international flights for indigo airlines. Their percentage of commission does not vary with distance, frequency, destination and seasonal fluctuation. Travel agents that have been consulted are from Delhi/NCR region

References
www.makemytrip.com www.yatra.com

www.cleartrip.com Principles of marketing by kotler,Armstrong,agnihotri,haque Service marketing www.goindigo.com www.goair.in www.jetlite.com www.spicejet.com

Agents: Neo Tours Location - H 18/67, Sector 7,, Rohini, Delhi - 110085 +(91)-9810880616 Makemytrip office Location - Shoppers Stop, TDI Mall, 11 Shivaji Place Complex, Rajouri Garden, Delhi 110027 Call - +(91)-11-66438233