Has India Inc hit another vulnerable spot similar to Sikka and Mistry’s exits?

By Pallavi Mody & Sushmita Srivastava

The exit of Aditya Ghosh from the position of president and director of IndiGo on April 27 raises more questions than it answers. Has India Inc hit one more vulnerable spot similar to Vishal Sikka’s and Cyrus Mistry’s exitsfrom Infosys and Tatas respectively?

IndiGo, India’s first successful lowcost carrier (LCC), started operations in 2006. Under Ghosh’s stewardship, it grew most impressively over 2008-18, bringing the airline’s market share to its current 40%. The winning formula was simple: low cost and ‘on-time arrival’, in a country where price-sensitive travellers were weary of inordinate delays in air travel.

Over the last decade, IndiGo’s fleet size increased from 18 airplanes to over 160. This enabled the airline to fly more than 1,000 daily flights, which led to an eight-fold increase in the topline. With cash registers ringing and strict cost control, IndiGo’s stock became the darling of investors — the price having nearly doubled from its issue price of .`765 in November 2015 to .`1,500 on April 27, 2018, with marketcapitalisation of over .`55,000 crore.

But all was not well. While Ghosh rightly basked in IndiGo’s success, the airline was plagued by many controversies.

Whether it was the decision to buy cheaper aircraft, or the inability to handle the crisis emerging out of the defective Pratt and Whitney engines that grounded eight planes, or the controversy over IndiGo staff ‘manhandling’ a passenger, the hyperactive social media declared that the airline was ‘not safe to fly’.

On top of all that, IndiGo got embroiled in a legal battle with the ministry of civil aviation as it refused to shift its operations to another terminal.

The airline lost the case in the Supreme Court. With Ghosh at the helm, the proverbial buck stopped with him.

During such turbulence, IndiGo was also following its dream project of going global. Last year, when GoI announced strategic disinvestment in Air India, IndiGo was quick to present its intent to buy the national carrier’s international operations. It withdrew once GoI refused to sell only Air India’s international operations.

Now that IndiGo is readying to go global full throttle, the airline is changing most of its policies that had, till date, given it such great results: appointing foreigners in various positions, moving to a mixed fleet insteadof operating a single-aircraft class, buying planes instead of leasing them, etc.

Does building an international low-cost long-haul airline require such drastic changes? And did Ghosh outlive his utility? Will the culture of IndiGo 2.0 match with the culture of the organisation that had been a poster boy of sorts of not just India’s civil aviation sector, but also of India Inc? The markets seem to be pondering over the same questions, as evident by IndiGo’s stock losing about 10% in the two trading days after Ghosh’s dramatic disembarkment.

The writers are professors at SP Jain Institute of Management and Research (SPJIMR), Mumbai

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