Even before he finds his feet in the Indian civil aviation market, IndiGo’s new CEO William Walsh — nicknamed the Slasher for his cost-cutting push during his stint at the Irish airline Aer Lingus — has his task cut out . Unlike his predecessor who took charge at a particularly favourable moment for IndiGo, Walsh will be at the helm after the airline has gone through some turbulence and faced a far more hostile external environment.
The conflict in West Asia — war clouds have dissipated but not vanished altogether — took a toll on the balance-sheets of all carriers, thanks to the soaring oil prices, supply chain disruptions, and the circuitous routes taken for some international destinations. IndiGo’s balance sheet and financial position — though better than those of rivals — has seen a serious reversal, from black to red.
IndiGo founder Rahul Bhatia assumed interim charge after Pieter Elbers exited as CEO in March. He brought in Aloke Singh, who served as CEO of Air India Express, as the chief of strategy. A new head of human resources, who has served at IndiGo’s parent company, InterGlobe Aviation Ltd, has also been drafted. This new team will work with Walsh, who is expected to join office in August.
IndiGo finds itself at a crucial juncture: The airline plans to reorient from being a no-frills, low-cost carrier plying on domestic and short-haul regional routes to becoming a credible player in long-haul routes -- while shifting to a two-class (premium and economy) aircraft configuration for a part of its fleet. It has placed orders for long-range aircraft that will allow it to fly to destinations that cannot be reached with its existing fleet.
{{/usCountry}}IndiGo finds itself at a crucial juncture: The airline plans to reorient from being a no-frills, low-cost carrier plying on domestic and short-haul regional routes to becoming a credible player in long-haul routes -- while shifting to a two-class (premium and economy) aircraft configuration for a part of its fleet. It has placed orders for long-range aircraft that will allow it to fly to destinations that cannot be reached with its existing fleet.
{{/usCountry}}IndiGo is, thus, in the 400-plus fleet category -- at a critical crossroad, with a complex fleet that will get even more complicated as aircraft orders get delivered.
Before IndiGo placed orders for wide-bodied aircraft, it was growing steadily with a fleet of primarily narrow-bodied aircraft -- resembling the American airline, SouthWest (though it was only half the size of the US airline). With disposable incomes in the two countries at such dramatically different levels, it could be some years before Indigo truly matches SouthWest’s size. The Indian market certainly can’t support such capacity expansion in a hurry.
After the Covid-19 pandemic, the airline looked at possible growth paths and concluded that long-haul international was the way to go. While that may seem the obvious path ahead for a growth-hungry airline, it poses many risks; how Indigo mitigates these will determine if the gamble was worth taking. It is worth recalling here that Jet Airways, India’s most successful private airline before Indigo arrived on the scene, stumbled precisely at this juncture. Till the time it was primarily domestic, it ruled the roost, albeit in a very different environment and context.
No matter how efficiently IndiGo manages its transition into a two-class configuration and a fleet with two types of aircraft body, its costs per available seat kilometre are bound to go up. Some of that may be expected -- and thus factored into profitability arithmetic -- but what remains to be seen is whether the resulting revenue upside takes care of the rest.
The elephant in the room, for Walsh and the new HR chief, will be the frayed relationship between the airline’s management and its crew. This became starkly evident during the operations collapse last December, when more than one commander was unavailable, called in sick, or refused to go beyond their remit to support the airline at a time of crisis.
A senior government official told this writer that the crisis could have been averted if more hands had become available. But, equally important, more than one commander believes the airline had it coming, given its handling of employees and the assumption that the regulator could always be swayed in its favour.
Commanders and crew have often voiced feeling alienated from the workings of the airline; an assertive yet gentle handling by the new management would work better here. Many experts see appropriate handling of employees as one of the determining factors on which the future of this behemoth is hinged.
Walsh, thus, has the unenviable task of setting the house in order while winning trust and respect of the existing senior management. All this, while ensuring he doesn’t rock too many boats, like his predecessor did. This has been the bane of the airline in the past, and remains a recurring problem in Indian aviation. Since this also currently afflicts IndiGo’s biggest rival, Air India, Walsh will have an illustration of what not to do.
Last but not least, IndiGo’s leaders must juggle all these responsibilities while firmly setting the airline back on the path to profitability. And this must be achieved without the support of one of its founders, Rakesh Gangwal. This might not sound like music to Walsh and Co.’s ears, but the estranged founder understood the business inside out and had both the experience and the network to navigate an ambitious expansion strategy. It is now incumbent on the team to pull this off while ensuring IndiGo remains the undisputed leader of the Indian skies.
Anjuli Bhargava writes on governance, infrastructure, and the social sector. The views expressed are personal.