IndiGo Won’t ‘Miss A Heartbeat’ In The Transition From Aditya To Greg, Says Co-Founder

The seemingly sudden resignation of Aditya Ghosh from India's largest airline IndiGo was “not so sudden” said the airline's co-founder Rahul Bhatia.

Bhatia told BloombergQuint that a few months ago Ghosh had expressed a desire to step down and devote more time to his personal life.

“Aditya has been integral to InterGlobe ever since the aviation project started 13 years ago. There can never be any animosity,” said Bhatia in an effort to counter rumours that Ghosh's departure was prompted by recent trouble at the airline connected to technical glitches in engines supplied by Pratt and Whitney and a few highly publicised customer run-ins with airline staff.

It may not be sudden, but the timing of Ghosh's departure is curious.

Ghosh, president and whole-time director of InterGlobe Aviation Ltd., the company that runs IndiGo, has stepped down just months before he finishes 10 years at the helm of the airline. He was appointed president in August 2008.

While a company filing with the stock exchanges on Apr. 27 said Bhatia would be interim chief executive officer, a separate media statement issued by the company on the same day said Gregory Taylor, who had been appointed senior adviser, was also being considered for the top job once regulatory clearance was received.

Interestingly, Taylor served as executive vice president of revenue management and network planning at IndiGo for over a year and left the airline as recently as February 2018.

Why did IndiGo let Taylor go if at the time it knew of Ghosh's desire to step down?

“ We were hopeful of convincing Aditya. That's why the gap between Greg leaving and coming back,” Bhatia claimed. He was emphatic in his efforts to quell speculation around Ghosh's exit. The press is dealing with Aditya unfairly he said.

New Team At IndiGo?

Recent media reports of an expansion of the executive leadership team at IndiGo have added fuel to the fire. Did Ghosh leave because of turf wars?

Bhatia said the additions would have happened irrespective of Ghosh's decision, referring to the appointment of Wolfgang Prock-Schauer as chief operating officer, Michael Swiatek as chief planning officer and Willy Boulter as chief strategy officer.

“Complexity is like a hockey stick in a growing airline,” he said.

From 30 aircraft in the early years to over 200 by March 2019, IndiGo's expanding scale needed someone to take charge of operations. Hence the appointment of a COO after eight years, he explained. For the purposes of scale and optimisation, the commercial group has been divided into network planning under Swiatek and revenue management, cargo and corporate communications under Boulter.

That the new hires are all expatriates has not gone unnoticed.

Strategy Headwinds At IndiGo?

Ghosh's departure has had analysts expressing concern about a change in leadership mid-air while the airline flies through uncharted territory.

“At a time when the company has decided to change strategy from single fleet to multi-fleet, from having operational leases to owning some assets, a guy as critical as Aditya Ghosh would have really played a key role,” Mayur Milak, aviation analyst at IndiaNivesh Securities told BloombergQuint in an earlier interview.

The move to a multi-aircraft fleet is because IndiGo intends to expand domestically with more flights to hinterland India, and add long-haul international routes as well.

The international operations will be expanded organically after the company withdrew its interest in state-owned Air India, saying the sale structure was not feasible to its plans. Since then it has had no further dialogue with the government.

IndiGo will add 21 ATR aircraft by the year end and more next year to service additional hinterland destinations in India. It recently won rights to service routes under the government's regional connectivity scheme - UDAN. Competitor SpiceJet Ltd., that was the first to participate in the scheme, has claimed over 90 percent passenger load factor in flights to small towns.

But IndiGo's ATR addition strategy is not just predicated on that.

It isn't as if regional routes didn't offer opportunity when IndiGo started up, but the current scale of the airline gives it confidence that it can maintain cost competitiveness even while servicing smaller routes. Bhatia dismissed arguments that route or aircraft diversification may impact the company's cost leadership. At Rs 3.30 the airline's cost per available seat is at least 13 percent lower than its nearest listed competitor as reported by BloombergQuint earlier.

Engine Trouble

For the last few months IndiGo has had to ground several planes, at one time 11, and cancel several flights, over 900 in the second half of March, on account of engine glitches in its A320 NEO fleet. While manufacturer Pratt & Whitney will compensate the airline for the financial losses, the impact on passenger traffic will be only known when the company announces it quarterly and annual earnings on May 2.

It's not clear if Ghosh will be present at the earnings announcement as he is no longer whole-time director. Taylor meanwhile is waiting for visa formalities to be completed before flying in as senior adviser and, in time, president and CEO. The transition will be smooth, Bhatia insisted.

“I don't expect the company to miss a heartbeat in the transition from Aditya to Greg.”