Even before he finds his feet in the Indian civil aviation market, IndiGo’s new chief executive, William Walsh – nicknamed “Slasher” for his cost-cutting efforts during his tenure at Irish airline Aer Lingus – has his job cut out for him. Unlike his predecessor who took over at a particularly favorable moment for IndiGo, Walsh will be at the helm after the company has gone through some turmoil and faced a much more hostile external environment.
Conflict in West Asia — the clouds of war have dissipated but not completely gone — has taken a toll on the balance sheets of all airlines, thanks to rising oil prices, supply chain disruptions, and circuitous routes being taken to 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 took interim charge after Peter Elbers exited as CEO in March. He appointed Alok Singh, who served as CEO of Air India Express, as chief strategy officer. A new head of human resources, who worked at IndiGo’s parent company, InterGlobe Aviation Ltd, has also been appointed. This new team will work with Walsh, who is expected to take office in August.
IndiGo finds itself at a crucial juncture: the airline plans to reorient itself from being a low-cost carrier operating on domestic and short-haul routes to become a reliable player on long-haul routes – while shifting to a two-class aircraft configuration (premium and economy) for 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 current fleet.
Thus, IndiGo falls into the 400-plus aircraft fleet category – at a critical crossroads, with a complex fleet that will become more complex as aircraft orders are delivered.
Before IndiGo placed orders for widebody aircraft, it had been steadily growing a fleet of primarily narrowbody aircraft – similar to US carrier SouthWest (although it was only half the size of US). With the two countries having significantly different levels of disposable income, it may take a few years before IndiGo can truly match Southwest’s size. The Indian market certainly cannot support such a hasty capacity expansion.
Following the Covid-19 pandemic, the airline looked at potential growth paths and concluded that long-haul international flights were the ideal solution. While this may seem like the obvious path for the growth-hungry airline, it poses many risks; How Indigo mitigates these matters will determine whether the gamble is worth taking. It is worth noting here that Jet Airways, India’s most successful private airline before IndiGo arrived on the scene, faltered precisely at this point. Up until the time when this game was primarily domestic, it ruled the roost, albeit in a very different environment and context.
No matter how well IndiGo manages its shift to a two-class configuration and a fleet with two fuselage types, its costs per available seat kilometer are bound to rise. Some of this may be expected – and therefore factored into profitability calculations – but what remains to be seen is whether the resulting rise in revenues will take care of the rest.
The elephant in the room, for Walsh and the new human resources chief, will be the strained relationship between the airline’s management and its crew. This became starkly evident during the collapse of operations last December, when more than one captain was unavailable, called in sick, or refused to go beyond their remit to support the airline in a time of crisis.
A senior government official told the author of the article that the crisis could have been avoided if more manpower had been available. But, just as importantly, more than one leader believes the airline has succeeded, given the way it treats employees and the assumption that the regulator can always be swayed in its favour.
Captains and cabin crew often expressed feeling alienated from the way the airline operated; Firm and gentle treatment by the new administration would be better here. Many experts believe that proper treatment of employees is one of the determining factors on which the future of this giant depends.
Thus, Walsh has the unenviable task of putting the house in order while earning the trust and respect of the current senior management. All this, while making sure it won’t upset too many boats, as its predecessor did. This has been a bane for the airline in the past, and continues to be a recurring problem in Indian aviation. Since this is also currently affecting IndiGo’s biggest competitor, Air India, Walsh will have an example of what not to do.
Last but not least, IndiGo’s leaders must juggle all these responsibilities while firmly putting the airline back on the path to profitability. This must be achieved without the support of one of its founders, Rakesh Gangwal. This may not sound like music to Walsh and Co.’s ears, but the estranged founder understood the business from the inside out and had the experience and network needed to navigate an ambitious expansion strategy. The team now has to achieve this while ensuring that IndiGo remains the undisputed leader of the Indian sky.
Anjuli Bhargava writes about governance, infrastructure and the social sector. The opinions expressed are personal.
