Developments at Interglobe Aviation Ltd, the parent company of IndiGo, may seem to suggest that something sinister was behind the departure of its long-term president Aditya Ghosh, after what can only be described as a spectacular 10 years at the country’s leading airline. Sure, IndiGo has in recent months faced some headwinds, in particular the problem with the Airbus A320neo aircraft powered by Pratt & Whitney engines, which forced it to cancel thousands of flights. There have been other problem areas as well including a rather unnecessary face-off with the government over temporarily moving part of its operations to a new terminal in Delhi.
But to say that Ghosh was directly responsible for any of these would be a bit churlish. Indeed, given how quickly the airline resumed normal operations after both events indicates the operational robustness the 42-year-old CEO had built, as much a key to its success, as its tight financial management. Even that last was partly his contribution, stemming from his background as a trained chartered accountant.
True, IndiGo’s transition from entrepreneur to industry leader hasn’t been all smooth flying. Recent incidents of misbehaviour by staffers seem to suggest its model of “before time” is under stress. However, these are a normal part of airline operations across the world (witness United Airlines’ violent eviction of a passenger from one of its flights last year) and stem from a clash between fliers’ anxieties leading to what is termed “air rage” and the need for airlines to stick to the drill under all circumstances. CEOs rarely get fired for such incidents.
Ghosh had to go simply because it was time for the company to change track. In its new trajectory, international operations were the new growth engine and Ghosh simply did not have the technical nous to direct those. Enter Gregory Taylor who’s been appointed as senior advisor to the company and is likely to be named its president & CEO.
Taylor’s background is interesting. According to his Bloomberg profile, he’s worked as Senior Vice President of Corporate Planning at United Airlines Inc. and also as Senior Vice President - Corporate Planning and Strategy of United Continental Holdings, Inc. (the holding company for United Airlines). He has more than 30 years of experience with United, where “he was responsible for all aspects of United and United Express network planning and revenue management.”
Now, if you were planning an international airline, isn’t that the kind of person you would want in the corner office? Much as there is to admire in Ghosh’s performance, the airline’s two co-promoters Rahul Bhatia and Rakesh Gangwal, both veterans of the sector, had to take a call. After all, IndiGo is betting big on its international operations and Ghosh with his limited global experience was just not the right man for the job.
Indeed, the move also suggests that the promoters themselves are not comfortable with micro-managing the airline’s soaring ambitions given the tricky nature of the global aviation business. Flying into and out of global hubs like Paris, Frankfurt, Brussels, Rome, Milan and Zurich, requires a completely different mindset from what drives success within India. Even Gangwal, an airline industry legend after his exploits with US Air, hasn’t had active dealings with the business for close on to 17 years now, ever since he left US Airways where he was the president and chief executive officer.
In this time, the aviation industry has undergone massive changes with the low-cost model that IndiGo implemented so successfully within the country now becoming the only route to profitability across the globe.
In a sector like airlines, where if you are not moving forward you are moving backwards, IndiGo’s global plan is audacious and imperative. But competing with the likes of American Airlines, Delta, United Airlines, Southwest or even a Ryanair and Easyjet, places the Indian start-up in an altogether different league. It also calls for different set of management skills from what Ghosh brought to the table. His departure is no reflection on his achievements but a sign of the fresh aspirations of its founders.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.