APRIL 30, 2018
Last week, Aditya Ghosh decided to quit Indigo, India’s largest airline, after heading it for a decade.
InterGlobe Aviation, which owns and operates IndiGo Airlines, informed the stock exchanges on April 27 that Ghosh, the company’s president and whole-time director, was stepping down. Rahul Bhatia, its co-founder, has taken over as interim CEO.
Ghosh’s unusual journey with IndiGo began as its lawyer in 2004. A law graduate from Delhi University, he worked for J Sagar Associates where InterGlobe Enterprise was his client. Impressed by his work, Bhatia inducted him in 2007 and promoted him as CEO the very next year following the exit of the then chief Bruce Ashby.
IndiGo has consistently performed well over the years. It was the only Indian airline to report a profit even in 2013 when high global fuel prices and a weakening rupee had wreaked havoc on the industry.
The airline was awarded for its best on-time performance and for being the best place to work for 10 years in a row. Besides, it also won the Skytrax world airline award eight consecutive times in the low-cost airline in central Asia and India category.
Buoyed by the success, it is looking at expanding its wings to fly long-haul international flights. In January, it reportedly sought the aviation ministry’s nod to fly to Frankfurt, Paris, Gatwick, Manchester, and Birmingham beginning October 2018 and to Brussels, Rome, Milan, and Zurich from 2019.
All fall down
In February and March, the aviation regulator directed IndiGo to ground eight of its flights due to safety concerns.
However, the plans came undone, even if temporarily, after some of the aircraft which ran on the Pratt & Whitney engines were grounded due to cooling and durability issues since 2016.
These aircraft can accommodate about 15,000 passengers and have resulted in huge losses for the IndiGo. Mark Martin, CEO of aviation consultancy firm Martin Consulting, had told Quartz earlier that the airline may be losing up to Rs7.2 lakh in revenue per aircraft per day. With eight of its aircraft down, IndiGo had to cancel several flights over many days, resulting in bad reviews.
Earlier, this month, another passenger was asked to get off a flight because he complained of mosquitoes.
Questionable on-time strategy
“It was brought to the notice of the committee that the flying time of IndiGo from Indore to Delhi is two hours whereas in other airlines, it is only one hour and 35 minutes. IndiGo is adopting a longer flying time in various sectors of their flights just to bolster their on-time performance,” report added.
The airline was embroiled in a legal battle with the Delhi International Airport (DIAL) since November. Authorities there had directed airlines operating from Terminal-1 to partially shift their flights to Terminal-2 for sometime to make way for some construction activity. Instead of following the orders, IndiGo decided to take DIAL to court as it was concerned it would spark confusion among its customers.
The carrier lost the case.
IndiGo was also the first company to formally express interest in buying the debt-ridden Air India. Its plan was to acquire the international operations of the government-run carrier. However the government clarified that it would not sell Air India piecemeal. So, earlier this month, IndiGo dropped out of the race saying it lacked the capability to turn Air India around.
Yet, investor confidence in IndiGo has remained intact. Since November 2017, the stock has gained over 13% on the BSE.
Courtesy/Source: Quartz India