Report of 'rift' between IndiGo promoters; airline calls it speculation

The report quoted sources as saying that the two partners have approached different law firms

Rahul Bhatia (left) with Rakesh Gangwal
Rahul Bhatia (left) with Rakesh Gangwal

Even as a report on Wednesday claimed an alleged rift between budget passenger carrier IndiGo's promoters -- Rahul Bhatia and Rakesh Gangwal -- the airline denied any such developments calling it mere speculation.

According to a business television report, differences have surfaced between Bhatia and Gangwal over managerial control of the firm. The report quoted sources as saying that the two partners have approached different law firms.

The differences are reportedly over Rahul Bhatia feeling that Gangwal trying to gain control of the airline by bringing his own team. The Indian Expres newspaper,  quoting sources, said the tension between the two promoters began simmering when the airline's former CEO Aditya Ghosh left in the airline in April 2018 and the consequent appointment of expatriates in management positions."A chunk of the expatriate executives at IndiGo, the source said, were handpicked by Gangwal from his former employer — United Airlines," the Indian Express report said.

Differences also cropped with Gangwal supporting growth at breakneck speed and on occasion, Bhatia, opting for a more cautious approach.  The two founders are, however, trying to iron out the differences so that the functioning of the airline isn’t impacted.

According to The Economic Times report, the founders believe IndiGo is at an inflection point with both Jet Airways and Air India floundering. The two believe IndiGo can occupy the vacant slots left behind by the two legacy carriers but differ on how to grab this opportunity. While Bhatia reportedly is keen on  wide-bodied aircraft to pursue its international dream,  Gangwal believes in single aircraft model and code sharing agreements rather than servicing long-haul destinations itself. 

The reports of promoter rift at IndiGo comes days after the debacle in Jet Airways, where the partnership between Naresh Goyal and the airline's stakeholder Eithad fell through.

Rahul Bhatia currently holds 38 per cent stake in Interglobe Aviation, the parent company of IndiGo, while Gangwal holds 37 per cent share in the company. The airline was founded by Bhatia and Gangwal in 2006.

The first sign that something was wrong with IndiGo’s famed tight ship showed up last summer. Calls to pilots from the rostering department to work on offdays had become frequent and on short notice.What made the situation more complex was a regulatory change introduced in 2017, extending the notice period for commanders to one year. “While IndiGo with its higher salary was able to poach pilots from rivals, the new rules made it difficult to do so,” an IndiGo executive, who recruits pilots for the company, reportedly said then.To tide over the crisis, IndiGo dispatched recruiters to Latin America and West Asia — areas where troubled airlines were cutting costs and laying off pilots. But multiple approvals required for inducting an expat pilot slowed the process.

Last June, the management put out a call offering pilots more money to work on extra days - the first time it had done so. While most IndiGo pilots work on a contract of 56 days of privilege leave, the company asked pilots to reduce it to 42 or 22 days for a bonus of Rs 35,000 and Rs 86,500.But the scheme reportedly roved to be short-sighted as it resulted in captains hitting the limit of 1,000 hours of allowed flying per year.

Expansion also meant the airline was opening multiple bases, but crew shortage resulted in uneven staffing in smaller bases. For instance, in Mumbai, it parks only six planes overnight, but has over 250 pilots, while the airline has stopped hiring for smaller bases like Pune, Jaipur, and Bhubaneswar.

This resulted in increased layover for pilots, leading to fatigue and uneven duty patterns. Many IndiGo pilots are currently operating three-four days at a stretch away from home.