Kingfisher airlines vs Indigo airlines: What led to different fates
Indigo Airlines currently rules the Indian aviation market with over 57% market share while the erstwhile ruler Kingfisher airlines has not only lost its market leadership position but also lost its flying license despite winning several international awards and accolades for their services.
What the Indigo airlines got right which the flamboyant Vijay Mallya’s Kingfisher airlines couldn’t?
Both the airlines started around the same time. Kingfisher started in 2005 while indigo in 2006. Kingfisher Airlines positioned itself as a luxury or premium airlines with luxury services catering to the country’s Uber rich. This was the biggest mistake because it had an extremely small customer pool to target. Although their services were premium and envied by fliers of other airlines there were not many takers for it because not many could afford their sky high airfares. Less than 5 lakh people in India had that level of paying capacity. Remember this was way back in 2005 when India’s economy was in a much poorer state and the people’s earnings were less than $1500 per capita.
Airlines anyways is a capital intensive business and if your target segment is sparse then you will have a hard time to sustain. This is what happened with kingfisher. The losses kept mounting and the impending debt to keep it alive but the revenues were not flowing in to keep pace with the costs.
Another mistake was kingfisher was predominantly operating in the Indian domestic markets. It’s first international flight was in 2008 from Bangalore to London. In international markets the competition was tougher with the likes of the international players like Emirates, Cathay Pacific, British Airways, Lufthansa already dominating the industry. These airlines could afford to be a luxury or premium segment because the geography they operate in has an umpteen number of rich people who could become their potential customers.
On the other hand Indigo positioned itself as a low cost airlines catering to the country’s middle class. They knew their geography, the customers and their number one requirements – cost effective. And the best part is they have a huge base of potential customers. They discarded all the other complementary services provided in airlines which adds to their costs like free food, bigger legspace etc. They know their customers won’t mind travelling in a cramped up space as long as the fares are low. So their entire operations revolved around fulfilling the core values of their customers and today they command the largest share in India’s airlines industry.
A difference in approach of these two airlines led to a different fate altogetherly with one going disappearing from the sky and the ground while the other ruling the sky.
In India no matter what you do, no matter what industry you are in, you have to ensure you are the lowest priced person in the given segment. And that’s exactly the reason why jio and Maruti Suzuki are so successful in India. Suzuki knows the price sensitivity of the Indian market and they don’t mind buying unsafe cars as long as the price is low.
That’s the reason why Maruti Suzuki is India’s no.1 car company with over 44% market share despite selling unsafe cars.
