What should Indigo do to retain its position as a market

leader? How should it improve its profitability?

Indian Aviation industry will be treated as oligopoly market
as there are few competitors. In oligopoly each firm tries to
have monopoly in the market but due to competition instead
of the reaching at personal profit maximization they are
forced to reach at Nash equilibrium.
- If oligopolistic industry would increase its prices in such a
case, consumers would switch to rivals, which would lead to
fall in the sales of the oligopolistic firm.
- If the oligopolistic industry reduces the price, the rival
airlines would also reduce prices for securing their customers
where in this case they are already operating at very low
price.
As all the airlines in Indian aviation industry follow dominant
strategy and focus on price sensitive customer, differentiating on
these bases would be pointless. So, to retain its position as a
market leader Indigo should sustain all its existing policies which
help them to differentiate them from others and in which they
have competitive advantage. With these the company should
come up with innovative ideas to bring down cost and increase
profit. Some of the ideas could be:
 The company can equip check-in staff with hand-held
scanners that allowed passengers without baggage to avoid
the dreaded scrum at the counter.
 Selling and leasing back its planes. the airline should
constantly replace its aircraft hence preventing the need for
overall checks and major repairs.
 Close check on staff at the check-in counters, air crew and
sales and marketing staff before and after hiring to keep the
quality of the Airline. This because now a day’s impact
comes from Customer experience
 Real-time inflight information from all the aircraft.
 Indigo should focus that it is in a services industry, where
competition is so cut throat, it needs to deliver on its
commitments.
  AI/ Chatbots to further respond immediately to customer’s
enquiries and questions
 For corporate travelers by meeting their key expectations of
network density, schedule and on-time performance.
 Creating business value through digital initiatives
 Collusion helps oligopolistic organizations
i. Helps organizations to increase their performance
ii. Provides opportunities to prevent the entry of new
organisations.
iii. Helps organizations in preventing uncertainties.
 If not collusion the mutual understanding between firms can
lead to better off situation and it can lead to win-win
situation. This is only possible because the demand for
aviation industry is increasing per year as shown in exhibit 2
and firms can take advantage of this.
To improve its profitability indigo should follow these steps:
 Sale-and-leaseback transactions that helped IndiGo record
higher profits.
 Keeping the price above marginal cost so as to increase
profit from selling one more unit of service and this can be
done only by reducing the cost.
 Technology is indeed Indigo’s passport to profitability.
 Less turnaround time which means less time on ground and
more time in air which reduces fuel burning.
 Targeting cities which have population more than 500,000 as
shown in Exhibit 1.
 To keep the aircraft flying for maximum number of hours
to gain more revenue.
 To decrease logistic costs by implementing new technology
to sell tickets, services provided by the company and
creating pint point marketing.
 As Indigo leads in market share of Indian Aviation Market for
the past 9 years as given in Exhibit 3 there is no need for
same advertisement because now people are aware and the
company can free-ride on the education provided by the
rivals in their advertisement.
 As there is an increase in the domestic passenger traffic as
reflected by exhibit 2 the company should focus on customer
experience and customer need which might lead to more
revenue.