Wednesday, May 16, 2018

View: Where on Earth is IndiGoing?

The exit of Aditya Ghosh from the position of president and director of IndiGoNSE 0.51 % on April 27 raises more questions than it answers. Has India Inc. hit one more vulnerable spot similar to Vishal Sikka’s and Cyrus Mistry’s exits from Infosys and Tatas respectively?

IndiGo, India’s first successful lowcost carrier (LCC), started operations in 2006. Under Ghosh’s stewardship, it grew most impressively over 2008-18, bringing the airline’s market share to its current 40%. The winning formula was simple: low cost and ‘on-time arrival’, in a country where price-sensitive travellers were weary of inordinate delays in air travel.

Over the last decade, IndiGo’s fleet size increased manifolds from 18 airplanes to over 160. This enabled the airline to fly more than 1,000 daily flights, which led to an eight-fold increase in the topline. With cash registers ringing and strict cost control, IndiGo’s stock became the darling of investors — the price having nearly doubled from its issue price of Rs 765 in November 2015 to Rs 1,500 on April 27, 2018, with market capitalisation of over Rs 55,000 crore.

But all was not well. While Ghosh rightly basked in IndiGo’s success, the airline was plagued by many controversies.

Whether it was the decision to buy cheaper aircraft, or the inability to handle the crisis emerging out of the defective Pratt and Whitney engines that grounded eight planes, or the controversy over IndiGo staff ‘manhandling’ a passenger, the hyperactive social media declared that the airline was ‘not safe to fly’.
16/05/18 Pallavi Mody & Sushmita Srivastava/Economic Times