Gangwal’s exit puts IndiGo on a new flight plan

In his letter to the airline’s board members, Gangwal said that his intention is to slowly reduce his equity stake in the company over the next five years without the benefit of “unpublished price sensitive information". He expects the gradual reduction of his stake to allow him to benefit from the upside in the company’s share price, while at the same time allowing the new investors to whom he will sell his holdings from the potential future growth of the airline that is India’s largest by market share.

Gangwal and Bhatia together own about 75% of the airline. The latter owns about 14.65%; his wife holds another 8.39% of the airline’s shares. The spat between the two co-promoters had started in 2019, with Gangwal accusing Bhatia on matters related to the company’s corporate governance.

IndiGo could not have got off the ground without either of the duos. Gangwal, a former CEO and chairman of US Airways Group, brought to the airline his considerable aviation expertise. IndiGo could not have set the global record it has by becoming the first airline company in the world to place an order for 100 aircraft without his backing. If IndiGo commands a market share of over 50% of India’s air travel, it is in large part due to its large fleet of over 275 aircraft, which would have been impossible for a nascent airline to accumulate without Gangwal’s standing in global aviation and his vendor negotiation skills. Globally, the duopoly of Boeing and Airbus does not normally entertain large orders from startups. All the same, the airline could not have taken wing without Bhatia’s deep understanding of the Indian air travel gained from the decades of experience as airlines’ General Sales Agents, and his extensive networking skills, given the airline business in this country depends heavily on licences, clearances and approvals from government agencies and authorities.

Gangwal’s decision was made public on a day IndiGo took delivery of its first aircraft operating on sustainable aviation fuel (SAF) from Airbus. This plane’s, an Airbus A320 New Engine Option, flight from Toulouse, the Airbus headquarter in France, to India is the first international operation by an Indian carrier using SAF. The exit is the first step in the co-promoters parting ways, as SnapView wrote on 31 December, following the long-drawn feud being brought to an amicable resolution with the airline’s board approving amendments to its articles of association, allowing the promoters to sell their shares without needing to first offer them to the other. 

Earlier this month, Bhatia took over as IndiGo’s managing director, consolidating his control over the day-to-day running of the airline, leaving no doubt that Gangwal was on his way out. The Delhi businessman’s aim from the word go has been to make the company profitable for which he has pursued strategies to cut costs and expand route networks.

While no one is irreplaceable, it remains to be seen who Bhatia will invite to step into Gangwal’s shoes. The grapevine has it that an Indian aviation expert currently stationed abroad, and just as adept at negotiations with the aircraft and engine manufacturers, will be brought in.

The exit is also expected to lead to changes in the company’s board as the directors considered close to Gangwal may follow in his footsteps. At the height of the public spat between two co-promoters, law enforcement in the US, acting on Bhatia’s complaint, had initiated searches there on the premises of one of the directors.

Without a doubt, IndiGo’s embarking on a new flight plan.