Is Low Cost Strategy in Airlines Sustainable? – A Comparative Financial Ratio Analysis of Low Cost Airline Companies in India

Abstract

Analysing a time series, cross sectional data of three Indian companies for a period of five years from 2011 to 2015, the present study compares the financial performance of low cost aircraft carriers in India. Low cost aircraft carriers included in study are Go Air, Spice Jet and Indigo. Used SPSS Tool, to perform ANOVA Test followed by Post Hoc (Tamhane) to identify differences among the three companies. Also graphical interpretation of financial ratios is done to understand the performance dynamics of these companies. The key findings show that financial performance of the three companies is statistically different; success of Indigo (Interglobe Aviation Ltd.) relies on its model by which it succeeds in making profits even in times of distress. Finally the study also discusses the sustainability aspect of low cost strategy in airlines.