IndiGo promoters Rakesh Gangwal (left) and Rahul Bhatia. (Photo: HT & Rames Pathania/Mint)
IndiGo promoters Rakesh Gangwal (left) and Rahul Bhatia. (Photo: HT & Rames Pathania/Mint)

A partnership falls victim to a clash of rivalling personal ambitions

  • Issues between Gangwal and Bhatia, pertaining to growth strategy of IndiGo, have built up over a period of time
  • Gangwal, a former chief executive and chairman of US Airways Group, had conceived IndiGo from scratch when he joined hands with Bhatia in 2004

MUMBAI : The veracity of Rakesh Gangwal’s public allegations against his partner Rahul Bhatia is yet to be proven, but what has clearly emerged is a personality clash between the co-founders of InterGlobe Aviation Ltd, which runs the IndiGo airline.

The differences between the two personalities have widened unabated, said several senior company officials who requested anonymity. Gangwal, who had been largely based in the US since IndiGo’s inception in 2005 and did not play a direct role in the daily operations of the airline, had complained about his growing marginalization in the company’s affairs, according to the people cited above.

Several contentious issues between the two, largely pertaining to the growth strategy of IndiGo, have slowly built up over a period of time. However, it was finally Bhatia’s decision to overrule Gangwal’s objections to around 600 engines purchased from CFM International, a French-US engine maker, which was the last straw.

Gangwal, a former chief executive and chairman of US Airways Group, had conceived IndiGo from scratch when he joined hands with Bhatia in 2004.

“It was a brave decision to venture into the sector at a time when many aviation companies were struggling to survive," said a former senior management employee of IndiGo. “However, Gangwal with an eye for the right talent and technology made IndiGo a profitable venture, something that is almost a rarity in India’s aviation sector," said the person mentioned above.

However, even as Gangwal went about setting up the airline, Bhatia a veteran of the travel and airline sector had set his sights on other businesses and had begun setting up his joint venture with French hospitality giant Accor SA to set up InterGlobe Hotels Pvt. Ltd (IHPL), a 60:40 JV between InterGlobe Enterprises Pvt. Ltd (IEPL), which owns and manages Ibis hotels in India. “A large part of early investment came from Rahul Bhatia and his family," said a second person who has worked closely with him in the hospitality business.

“The family had mobilized the initial funds for the airline and the hotel venture largely from internal accruals from existing businesses, which included a ticket sales and distribution, ground handling and a stake sale in the group’s technology business Interglobe Technology Quotient (ITQ), for close to $140 million to private equity funds," the person added.

Over the years, Bhatia’s ventures have flourished. The portfolio of InterGlobe Hotels has grown to 21 hotels in India which besides Ibis also includes a Novotel property brand. Of the portfolio of 21 hotels, 16 are currently operational; one is nearing the commercial operations date.The company is expected to have a cumulative inventory of 3,927 rooms in the next four years across India (as per firmed up plans).

“I can safely say that all dealings with IndiGo were done at an arm’s length and it was the professional managers who took the day-to-day calls and Bhatia intervened only when necessary," said a former employee who was part of the launch team of InterGlobe Hotels.

“Gangwal perhaps felt left out in the midst of all this and has made no qualms about this internally," said one of the persons mentioned above. “However, the fact remains that for the employees and the senior management, it was always Rahul Bhatia who mattered the most and this is precisely what Gangwal is seeking to change," the person said.

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