As Aditya Ghosh leaves, staying 6E will be that much harder for IndiGo

IndiGo commenced operations in August 2006 - placing three eye-popping orders for planes before and after. In 2005, it ordered 100 Airbus A320 planes - the biggest order ever at that time by an Indian airline. The fact that it came from a start-up left many bewildered. It followed up with a 180-plane order for the more fuel-efficient A320neos in 2011. Lo and behold, it ordered 250 more A320neos in 2015 – it remains the largest single order by an airline in the Indian aviation history.

While the Gurugram-based company awaits the delivery of its second order before the third begins, in less than 12 years, it has 161 planes including six ATRs for flights to under-served and unserved airports.

Also Read: Moneycontrol's exclusive Q&A with Aditya Ghosh

The company cracked the price-sensitive nature of the Indian consumer from the word go. Its freshly minted A320 planes and on-time performance with no-frills service sat well with the Indian passenger. IndiGo is unarguably the first and most successful private sector airline in India. All others - born in the 1990s - folded up long back. SpiceJet of today, after several ownership changes and after near-closure circumstances, turned profitable only three years back. IndiGo has had ten straight years of profits.

Undoubtedly, Ghosh, also the airline’s whole-time director and president, made IndiGo what it is today. With promoters – Rakesh Gangwal and Rahul Bhatia – who prefer to stay away from the limelight, he was the public face, putting his legal acumen and hold over both English and Hindi to good use. The airline brand is bigger than the parent today and the challenges, thus, that much bigger.

As an Airport Authority official told Moneycontrol while referring to IndiGo, “People want the government to sell Air India. But it must be remembered private sector monopoly is worse than public sector monopoly. There is a monopoly that has been created in the private sector now.” Last one and a half year may be a good reflection of that contention.

The airline has often tried to bulldoze its way through even as its service standards have fallen. As a leader, it has been slow to respond – slow to react to policy changes, slow to respond to passenger issues.

It was involved in late 2016 in the most unnecessary spat with its rival SpiceJet over who had a better on-time performance. SpiceJet, spurred by new fund infusion and a new promoter in the form of Ajay Singh, had begun to turn around. It reported on the top of the on-time performance barometer for a few months. Unable to digest this unseating from the perch, IndiGo shot off a letter to the regulator questioning the very methodology it had used to advertise when the numbers suited it. The competition, since, has clipped at the budget airline with only more ferocity. But worse was yet to come and it was arguably the worst.

The airline’s image took a beating of the worst kind in November last year when a video of its staff manhandling a passenger at Delhi airport surfaced. As the video went viral, the airline had to profusely apologise to the authorities and the public after an initial attempt to hide behind rules on safety and protocol.

The incident was just a beginning. The airline had by September 2017 ignored 69 instances of engine failures in its A320neos for as long as 18 months. It was only in March this year, on being asked by the safety regulator, that the low-cost carrier grounded 11 of its A320neos.

Even as an official of Pratt & Whitney -- the company behind the faulty engines in the Airbus planes – blamed the furore on general public’s lack of clarity over what counts for ‘air worthiness’ and ‘air safety’, experts Moneycontrol spoke to said excessive flying of the planes in the hot Indian conditions could also be a factor behind the failures. The regulator too did no credit to its own reputation in the entire episode.

While a passenger manhandling could be blamed on staff and engine failure on the supplier, IndiGo slipped even on fronts that were entirely under its control. The Delhi airport operator had to undertake expansion work at terminal-1. There were three airlines that had to shift their operations to terminal-2 of the airport from terminal-1 . These were IndiGo, SpiceJet and GoAir.

GoAir shifted without much ado. SpiceJet was willing to shift but only if IndiGo also agreed as per the agreement that airlines signed with the airport operator. During the entire imbroglio, the government did its best to persuade IndiGo but the airline remained adamant as the cost of operations at terminal-2 were going to be higher.

The matter went up to the Supreme Court which finally called IndiGo's bluff. Needless to say, vital expansion work at terminal-1 was held back due to the intransigence of India’s largest airline. Industry insiders Moneycontrol spoke to cited the airline’s handling of terminal-2 shifting and A320neo issues as examples of its arrogance and strong-arm tactics, both a result of its dominance in the world’s third-largest aviation market.

Take-off delays

The government launched its regional connectivity scheme called UDAN in 2016. UDAN stands for ‘Ude Desh Ka Aam Nagrik’, roughly meaning ‘the country’s common man shall fly’. The scheme subsidises some seats in a flight connecting under-served and unserved airports and as the name suggests, aims to make flying affordable for the common man. It’s one of the pet projects of the Prime Minister.

Whoever asks for the lowest government support gets the route. Sticking to its policy of plying narrow-body planes, IndiGo did not participate in round one of the scheme. As luck would have it, the scheme might not have been a runaway success, thanks to the lack of infrastructure at most airports in the country, but it wasn’t dismal either.

SpiceJet was the biggest winner of round one and the scheme took off. For the first time, IndiGo seemed to be reacting, unusual for a company that boasted of setting standards. IndiGo was forced to diversify its narrow-body fleet to include Turboprops to fly regional routes. It managed to bag a few routes in the second round of the scheme and has since commenced services on some of those.

In the last nine months, the airline has also expressed its desire to buy Air India’s airline operations and then withdrawn its intent.

The product mix of the airline is only going to get more complex as it adds more varied planes to cater to more routes. The fleet, so far comprising all narrow-body planes with the exception of six ATRs (the company plans to induct 44 more ATRs for now) may see an addition of wide-body aircraft in time to cater to long-distance international routes.

IndiGo has roped in several expatriates from foreign airlines in last one year as it prepares to grow its international operations bigger. One of them, Greg Taylor, will replace Ghosh. Taylor, currently serving as senior advisor and reporting directly to Bhatia, was the executive vice president of revenue management and network planning at IndiGo in 2016-17.

Cindy Szadokierski, a United Airlines veteran of 17 years, was brought to look after airport operations. Jason Herter quit Air Asia, a highly successful low-cost carrier from Malaysia, to join as vice president in operation control centre of the airline.

In the July 2017 conference call while announcing the plan to bid for Air India, promoter Rahul Bhatia had this to say in his opening remarks: “...we, at IndiGo, were constrained and not able to provide more clarity to the investor community and the press about our plans. We should have done a better job at this...”

A six percent fall in the company’s share price, a day ahead of Friday’s announcement of Ghosh’s departure, could easily be forgotten. As for Ghosh, ‘busy living life’ as per his WhatsApp status, one wonders how long the ‘6E’ in his Twitter handle will stay. The 15,000 company employees would like their former boss to keep it. @IndiGo6E clearly plans to retain its own.