Differences between the two founders have now come into open, threatening the airline's future
Some call them chalk and cheese.
One was Rahul Bhatia, who had started off as a reluctant entrepreneur, and wanted to get into teaching after a venture failed. But when his father was 'ushered out' of the travel company he had founded, the son started another - InterGlobe.
Over the years, Bhatia mastered the art of networking, building contacts in government offices in Delhi, often sitting for hours to get an appointment. And at InterGlobe, which started off selling tickets for airlines, he built a company that would give him the mastery over back-end operations of an airline.
Even as Bhatia built and diversified InterGlobe, which later ventured into hospitality, thousands of miles away in the US, Rakesh Gangwal had already made a reputation as the consummate aviation professional.
An alumnus of IIT Kanpur and Wharton School, Gangwal had built on his aviation career since joining United Airlines - now the fourth largest in the world - in 1984. He went on to hold senior positions in the airline, was an Executive Vice President at Air France and capped off his aviation career after completing his term as the CEO of US Airways, which was later merged into American Airlines, the world's largest airline.
The two had first met in the corridors of United Airlines. Bhatia was there representing IBM, where he worked for two years while studying engineering at the University of Waterloo. The Indian entrepreneur would later say in an interview that he was sure that if he ever started an airline, Gangwal had to be his partner.
The two did make a "terrific team," as an industry old-timer puts it.
"Rahul and Rakesh complemented each other; as a team their combined skillsets was lethal," says the executive who didn't want to be named.
"Rahul had a well-entrenched knowledge of the Indian market and could manage the local environment, had a great distribution network with InterGlobe and had attention to detail on the product.
"That gelled with Rakesh’s great experience with large airlines and his visionary thinking in placing very big aircraft orders and in-depth knowledge of the operational area," said the official.
The partnership's success was for all to see. While other airlines like Jet Airways and SpiceJet seem to be struggling with the industry conditions, including high fuel costs, IndiGo - since its start in 2005 - seemed to be only gaining. Some of the rivals even commented that IndiGo's financials should be taken "with a pinch of salt."
The two partners
Bhatia and Gangwal's expertise came out in two ways.
Bhatia was obsessed with the cost. He said in an interview with Forbes India, that he would think before spending each dollar. "Do I need to spend it? Can I get away without it?" The airline invariably had higher aircraft utilisation rates and quicker turnaround time than its peers.
The frugality - once Bhatia turned up for an important industry meeting in a Wagon R, while other honchos came in luxury cars - was ridiculed by rivals. But the market noticed.
Gangwal, as the executive mentioned above, was a path-breaker by convincing Airbus to sell 100 of its A320 aircraft even before IndiGo started flying. Not just that, he managed a contract that included maintenance agreements with full guarantees on aircraft parts.
As a result, IndiGo grew steadily. In 2010, it had a market share of 18.6 percent, the same as Kingfisher. That share has grown to 44 percent by March, this year. Meanwhile, Kingfisher has shut operations, and Jet Airways is struggling to resume after suspending services in April.
Industry insiders say that differences between Bhatia and Gangwal were always there. "But I could never imagine that the situation was in any way this serious," says an executive.
First visible cracks in the partnership between the two came last year with the exit of Aditya Ghosh, the IndiGo president who was said to be close to Bhatia, in April last year.
In place of Ghosh, IndiGo roped in Greg Taylor, who had an earlier stint with the airline. Taylor, who sources said was a Gangwal appointee, was initially appointed as senior advisor and was tipped to take over as president & CEO later in the year.
But later when Taylor had to resign due to lack of security clearance (a very flimsy reason) and Ronojoy Dutta (perceived as Bhatia’s man) came, "something appeared to be off," said a senior executive from an airline.
In December 2018, Dutta - who also had a stint in United Airlines - was appointed Principal Consultant of IndiGo. A month later, he was crowned the CEO.
"There is no doubt that Dutta has rich experience. But does Dutta, who was also a president at Air Sahara, have the experience of running a big, low-cost airline?" asks an industry veteran. That question added the veteran, rankled Gangwal.
IndiGo is now Asia's largest low-cost carrier. It has over 220 aircraft, operates 1,400 flights a day and flies to nearly 70 domestic, and 18 international destinations.
While the two have differences over the shareholder's agreement, it is still not clear what the exact bone of contention is, and for what have the two partners involved lawyers.
"The shareholder's agreement details rights of appointments, rights of board seats and rights to decide strategy. There could be differences in the interpretation of the agreement, and lawyers could help in this," says Shriram Subramanian of InGovern, a proxy advisory firm.
The two founders have almost equal stakes in the company. While Bhatia and his family own a little over 38 percent, Gangwal controls a shade lower than 37 percent.
IndiGo has a market share of Rs 55,277 crore, and both Gangwal and Bhatia are billionaires, many times over. While Bhatia ranks 41 on the Forbes India Rich List with a wealth of 3.55 billion, Gangwal has a net worth of $3.4 billion. Gangwal is a US citizen and thus doesn't feature in the Forbes India list. But he appears on the global list of richest people.
Company insiders say Bhatia has more say in IndiGo affairs. "There is no doubt that Gangwal can never have control. The question is if he should exit the company," says one of the officials quoted above.
If he does decide to, Bhatia has the right of first refusal. But there would be many other interested parties, including Qatar Airways, who would want to buy Gangwal's stake. Qatar Airways CEO Akbar Al Baker has been vocal about his interest in taking a stake in IndiGo.
But it is an exit that not many, including investors, would like. IndiGo stock had its worst intra-day loss in more than six months, falling over eight percent on Thursday after news about the founders' surfaces again. Moneycontrol was the first to break it, in December 2018."They have worked together so well till now. No reason for them to not try and settle differences and make IndiGo even more successful than it already is," says an industry executive.