How can Air India beat Indigo in 2023? ✈️
Insight behind the category that thrives on full stack business building.
Welcome to the 112th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
The first edition of GrowthShorts in 2023 is here. We are joined by 1,253 curious souls since the last issue in December. Welcome to the GrowthX family, friends.
Now, onto the story 👇🏻
2021 : Tata group reclaimed Air India from the government.
2022 : Air India in process of placing a 500 plane order.
Here’s how Air India could be the market leaders in 2023 ⬇️
Quick context 🗓
Air India had its rough years. It had pilot strikes, subsidiaries going down, failed mergers & the list just doesn’t end. But, it’ll all change for good, finally. The Tata group bought back 100% stake into the airline making it a private entity.
Air India’s moves in last 12 months 🎢
First, it moved its offices out of government building.
Second, its 27 long-grounded aircrafts have returned to skies.
Third, it plans to solve for more routes & additional infrastructure it needs.
But, what would make Air India the market leader?
This a lesson every business can learn from. If you have been paying attention, Airline business is brutal. Even the best of the best struggle to breakeven. Take Indigo for example, it had the toughest recent quarters owing to higher fuel prices & depreciating rupee. Air India’s journey is going to be learning from its competitors and then innovating on top of them.
So, what should Air India learn from Indigo?
First, solve for number of airplanes.
You can’t be the market leader without enough planes. Until you have flights from major domestic metro cities at high frequency, you can’t own the demand. Especially the flights originating from prime cities such as Mumbai, Delhi, Bengaluru, Ahmadabad, Chennai, Hyderabad. Once metro routes are solved for, next is tier 2 cities. These are the core destinations for leisure/business travel.
Second, solve for standardisation.
Indigo’s main advantage comes from its type of fleet. The budget carrier chose the Airbus A320 as its plane of choice and has stuck by it for over 15 years now. This allows it to save costs on pilot re-training, volume costings on parts & repairs, hiring one type of on-ground infrastructure & even its airport bus capacities. With the 500 airplane order, Air India is going this exact route.
Third, choose the right partners.
More routes do not really solve for positive cash flows, fill rates do. Air India needs to work with OTAs such as MakeMyTrip, ClearTrip & so on to really get its demand up. Supply drives demand but, demand shapes the way supply grows. So it’ll start with adding planes but routes will evolve with demand catching up.
Fourth, solve for right metrics.
Airlines focus too much on getting random shit to passengers. Think Kingfisher’s crazy spending spree with economic tickets. It does not work in price-sensitive markets like India. Solve for on-time flights, the most economical tickets & flights throughout peak hours/days/weeks, period.
Fifth, ruthless cost saving.
You won't find Indigo giving complimentary meals on economy, even on international routes. Our own Air India used to splurge free alcohol and meals on all international flights. Buying new planes at discounts & selling them off before they get old, removes any chances of spending on big repairs.
Interestingly, you will never see Indigo planes using the airport bridge boarding but the bus & ramps to save money on these charges.
Lastly, understand revenue levers well.
Airlines make a considerable portion of their profits from cargo division. Really bring the A-Game in becoming the preferred cargo carrier. This can be the cash cow Air India needs to clear its debt & get a high return on investment on its new planes.
That's all for now ♥️
I want you to deeply think about this issue & ask yourself “How can I think about each point above & apply it to my product?”. The reflection is why I write this newsletter in the first place. Oh, and if you want to start off this year by following the GrowthX YouTube channel, feel free to. It’s a reflection of the perspective we carry at GrowthX.
