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Jayant Mundhra
•
Dexter Capital Advisors • 5h
It's crazy that IndiGo enjoys a complete/near-monopoly on 35/66% of its domestic routes! I mean, everyone focuses on the brutal price wars on major routes. We see the fight for Delhi-Mumbai or Bangalore-Chennai. This is the visible, noisy part of the aviation market. - But, the real battle was won quietly, in skies where no one else was flying - IndiGo’s genius isn't just fighting hard; it’s not having to fight at all .. These routes are IndiGo’s untouchable "profit sanctuaries." They are the lifelines connecting dozens of Tier-2 and Tier-3 cities across India, markets that others ignored. - On these exclusive routes, IndiGo dictates the price. There is no rival to undercut them, allowing for healthier margins - This builds a massive, reliable war chest of profits And, what does IndiGo do with this money? They use it to fuel their aggression elsewhere. .. What do I mean? The cash generated from a monopoly route like Shillong to Dibrugarh funds the unsustainable, low fares on competitive metro routes. - Meanwhile, competitors simply cannot keep up, as they don't have a vast, protected network of monopoly routes to fall back on - They are forced to fight a price war they are financially unequipped to win This creates a powerful and virtuous cycle for IndiGo. The uncontested routes generate cash. The cash is used to win market share on contested routes. This overall dominance then helps them launch even more exclusive routes. IndiGo built an empire not by conquering the big cities - but by quietly colonizing the rest of the map. Crazy, isn’t it? Did you know this?
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