A decade ago, Rakesh Gangwal was trying to place a large order of aeroplanes for IndiGo, the airline he and Rahul Bhatia had dreamed up as a world-class, low-cost carrier based in India. Both Airbus and Boeing offered 50 planes.
“Let’s change that number a little, let’s make it a hundred,” said Gangwal. No way, they said. But Gangwal was adamant. Eventually Airbus gave in first and Gangwal went with it.
IndiGo thus created history at the Paris Air Show of 2005. No start-up airline had placed such a large order — a firm order, which has to be carried through, not an option, which one can walk out of.
Part of the reason Airbus agreed was Gangwal’s enviable record in aviation, which culminated in his being the CEO of US Airways. “I have known Airbus and Boeing for a long time. Leaders and decision makers of those companies are willing to bet on certain people,” he says. IndiGo president Aditya Ghosh is more forthcoming: “Rakesh is the lead on that, he continuously underplays his role.”
Airbus will forever be glad it went with Gangwal. IndiGo is buying 430 more Airbus planes, which are to come over the next 10 years. New airlines in India have to look at Airbus because there is now an ecosystem of facilities synched with Airbus.
Then IndiGo went a step ahead. Its bulk order got the planes at a discount, most of which it sold to lessors, and then took them back on six-year leases. This keeps the maintenance cost low and the fleet young, though the lease rate is higher than what some airlines pay while taking leases of 20 years or so.
But the wizard of Aircraft order and their clever management does not meet the press. He spoke to HT on Monday because Interglobe Aviation, IndiGo’s parent company, is floating an initial public offer that opens on Tuesday for anchor investors and he was pressed into talking to the media.
Gangwal is an avuncular man, comfortable in a simple T-shirt with collars in a posh conference room. He laughs easily. But he just won’t be photographed. “My daughter will say, ‘What’s this, are you a rock star?’”
But how does one write about him without a photo? “Don’t write about me,” he says with a laugh. “I live a simple life and like to visit dhabas with friends. After this (the IPO), I am going to disappear again.”
How does one resist writing that?
Jack Ma regrets taking Alibaba pubic. Michael Dell appears ecstatic his company is no longer public. Why are you taking Interglobe Aviation public?
We struggled with it. Staying private allows you to make decisions fast. Your concern is not the financial loss but long-term vision and making big bets. Once you have a lot of shareholders, the responsibility is higher, and you become a tad more conservative. We have $50 billion worth of airplanes, at list price, coming to us. We are starting sale and lease back. Today we have a great relationship with Airbus and lessors. But lessors consider a privately-held company a bit of a risk. It is a rite of passage when you get the stamp of a listed company. We think we can push our lessors to reduce the lease cost just a little bit more.
Qatar Airways is said to be wooing you. Don’t you want a strategic investor?
No, they will want to run it their way.
Only 70 million Indians flew last year. That is a fourth of the Chinese market.
India has to build and open new airports. Delhi, Mumbai, Kolkata, and Chennai need one more airport. The taxation needs to change. This is not the upper crust flying.
There has been concern over your declaring a hefty dividend just before the IPO. It put your net worth in the negative for a brief while. Any second thoughts?
No second thoughts. Someone said that had we paid $20 million less, we would be in the positive column (of net worth). You probably don’t want to create an optics issue. But it does not change anything.