What keeps IndiGo's profit flying high?

New  Delhi: Last fortnight, IndiGo Airlines, the country's largest low-cost carrier, announced a fivefold increase in net profit to Rs 787 crore for 2012-13. Rivals Jet Airways and SpiceJet together made a loss of over Rs 671 crore in the financial year. This was IndiGo's fifth straight year of profit, while the industry lost Rs 46,000 crore in the five-year period. Data compiled by the Centre for Asia Pacific Aviation shows IndiGo has made cumulative profit of Rs 2,200 crore in the last five years. In the period, Kingfisher Airlines went belly up. State-owned Air India, despite the infusion of fresh equity from the government and a slight improvement in performance, is still struggling.
The huge profit for 2012-13 happened in spite of adverse market conditions. Fuel costs went up 13 per cent, the rupee weakened 7 per cent and domestic traffic decreased 3.4 per cent in 2012 over the previous year. The only good news is that the price war has ended, at least for the time being. So, how did IndiGo report so much profit? Aditya Ghosh, IndiGo's low-profile CEO who entered the industry accidentally as a legal counsel to the airline, makes it sound simple: "We increased revenues because of capacity expansion, improved yields, increased efficiency and contained costs; and there were no major fare wars last year."
Read news in full 09/10/13 Surajeet Das Gupta & Aneesh Phadnis/Business Standard