Open Access Open Access  Restricted Access Subscription Access

Capacity Planning and Yield Management in Indian Budget Airlines

Nagendra A N

Abstract


This study compares yield management strategies of India’s leading low-cost carriers, IndiGo and SpiceJet, over 2015–2025. Using real-time fare data from ten popular Bangalore routes across five advance-booking windows (7, 14, 30, 60, 90 days) and financial and operational metrics, analyze how each airline balances pricing, capacity, and market share. IndiGo achieved market share growth from 32.8% to 62.4% and improved operating revenue per 1,000 PKM by 38.7% (₹3.85 → ₹5.34). SpiceJet’s share fell from 13.8% to 3.5% despite a 52.2% yield increase (₹3.72 → ₹5.66). IndiGo maintains controlled price variation (59% across windows) and 100% route availability, supporting its volume-based strategy. SpiceJet shows extreme volatility (158% variation) and 84% average route coverage, reflecting capacity constraints. Composite scoring rates IndiGo’s yield management at 0.871/1.000 versus SpiceJet’s 0.833/1.000. Operational scale gives IndiGo cost advantages, while SpiceJet’s premium pricing limits volume growth. Recommending premium fare classes, AI-driven personalization, and ancillary bundling for IndiGo; and pricing stability, 100% route consistency, and improved fleet utilization for SpiceJet. This research offers actionable insights for enhancing yield management in budget airlines.


Full Text:

PDF

References


Academia.edu Research. (2017). Strategic analysis: Indian low-cost airlines and their future sustainability. Academia.edu.

Cornell University eCommons. (1992). Yield management: A tool for capacity-constrained service firms (S. E. Kimes). Cornell University.

Cornell University eCommons. (2016). Revenue management for low-cost providers (B. Marcus & C. K. Anderson). Cornell University.

Darow, R. M., Leimkuhler, J. F., & Smith, B. C. (1992). Yield management at American Airlines. Interfaces, 22(1), 8–31.

Jayathilakan, A., Ngo, T., & Tsui, W. H. K. (2024). Examining the determinants of Indian airlines’ revenues: An endogeneity-corrected analysis. Journal of Air Transport Management.

Marcus, B., & Anderson, C. K. (2016). Revenue management for low-cost providers. Cornell University eCommons.

Smith, B. C., Leimkuhler, J. F., & Darrow, R. M. (1992). Yield management at American Airlines. Interfaces, 22(1), 8–31.

SSRN. (2020). Low cost carrier model in India. SSRN.

Statista. (2025). Revenue passenger kilometers of IndiGo FY 2015–2021.

Statista. (2025). Financial performance for IndiGo FY 2015–2025.


Refbacks

  • There are currently no refbacks.