Indigo was the original genius of India’s low-cost model, however, now they are a no-frills carrier, but not low-cost anymore. As an airline they are one of the biggest customers of Airbus’ bestselling A320 aircraft family, have 40%+ marketshare in India, and are now a listed enterprise.
All seems to be well, right? But seems there is still potential to be doing more. I’ve heard over the past month very strong rumours about Indigo planning to launch their very own loyalty program. I’ve also heard their breakup with American Express is to facilitate the launch of this loyalty program.
But I tell you they are a no-frills carrier, so then why do they need it? Especially when with their network they already have a 40% market share in India domestic passengers. And over the past ten years they have already created a reputation for themselves as an on-time carrier. I know flyers who have stopped looking out for Jet Airways or Air India and actually switched to flying Indigo on the back of a bigger network and its on-time reputation and well maintained planes. All this over a period of roughly 11 years.
Never say never
In the world of aviation, never say never. Indigo started with a different set of premises and now their business objectives are slightly different. As someone who will mount even more capacity across the country (the airline has about 135 planes in service but another 459 on order, including their regional planes), the airline needs to make sure they close their ranks with the customers. Which is where they hope a marketing/loyalty program would help them.
Their On-time zeal is being slightly crippled by the aviation infrastructure in the country. At the four major airports, they are now clocking 85% on time performance rather than closer to 100%. This might signal the loss of their USP, which they used to do better than everyone else. So they are preparing new zones to get the customer to stay with them, maybe?
Next, they will see capacity being mounted by other players as well. SpiceJet has a big plane order, GoAir too, and Jet Airways perhaps signing one next week. So, if they are all going to fight on price, perhaps Indigo is hoping some of them will stay because of the perks of loyalty. Especially in the corporate market, which is rapidly expanding as people switch from trains to planes, it does not hurt to play on the customer’s ego by giving him the opportunity to get a free coffee on the flight or a shot at free priority boarding.
It could be a revenue driver as well. Airlines abroad, and at home as well, sell loyalty points to various financial institutions and get them to be profit centres. Various American airlines such as Delta went through bankruptcy restructuring on the back of getting advance payments in billions from their co-branded card issuers. Closer home, the sale of JetPrivilege was one of the key tools used to strike a deal with Etihad Airways for equity in Jet Airways.
And last but not the least, even at current occupancy levels of 86.9%, they have tonnes of seats open which they can use as carrot to the frequent flyer to increase occupancy as well as keep them coming back.
Data is a great tool in today’s day and age. A few months back Indigo started to sell INR 99 vouchers for INR 899 value, which signaled an intent to collect data. Now maybe is the time to use it.
GoAir for a brief period tried having a loyalty program but withdrew it. SpiceJet right now runs SpiceClub. Air Asia has BIG rewards. So, maybe it is time Indigo got into the game big.
Do you hear anything about their loyalty program coming? Do you see any benefit coming out of this for them or you? I’m keen to hear…