Year 2022 has been full of announcements of CEO announcements for Indian airlines. First, we heard that Sanjiv Kapoor would helm the restart effort of Jet Airways. Then, after a debacle with the hiring of Ilker Ayci of Turkish Airlines, Air India has now announced the appointment of New Zealand born Campbell Wilson, who will take on the responsibilities of the airline's CEO.
The latest announcement came last week. Ronojoy Dutta, IndiGo’s current CEO, will retire by September 30, 2022, and hand over the baton to Pieter Elbers. The latter is in the process of exiting KLM after almost two terms as the CEO at the end of the month. Twenty years younger than Rono, Pieter will be able to set up IndiGo for its next stage of growth. But his first priority won’t even be that.
Steadying the ship
IndiGo has, for the longest time, let its work do the talking. However, Pieter walks into too many changes in one go. The airline is witnessing extensive changes at the top level. Promoter Rahul Bhatia took on the role of Managing Director less than six months ago. IndiGo’s Chief Commercial Officer, Willy Boulter, will leave the airline in July, and the airline already saw a change in the Chief Financial Officer earlier this year. So, many new hands on deck to work with.
Dutta’s focus over his almost four-year stint was mainly on the same lines but different. He had to work extensively to shield the company from any fallout when the co-founders, Rahul Bhatia and Rakesh Gangwal, engaged in a lengthy legal battle. It has only recently concluded with Gangwal announcing his departure from the company board.
He also had another nightmare to deal with: keeping the ship steady through COVID. Over the better part of two years, COVID continued to surprise both passengers and airlines with its phases, and Dutta did a pretty good job of keeping the airline stable, even bringing it back into profits in Q3FY22.
Heightened competition
Elbers will enter the airline at a time when there will be two more airlines to contend with than Dutta saw. Both Akasa and Jet Airways would have taken to the skies in the coming months, and Go First, which would have hopefully set its house in order, would have managed an IPO by then, making it financially stronger.
The Tata group consolidation might have also begun, with AirAsia India being wrapped up into Air India. That won’t be an overnight process, and M&As in aviation tend to be messy if Sahara/Jet Airways or Deccan/Kingfisher or Indian Airlines/Air India taught us anything. But it will just be an enormous beast to deal with when done.
Also, this means these players will come charging for the trained human resources that IndiGo has. Some for the pilots and cabin crew, and others for the managerial talent of the airline. IndiGo will need to demonstrate daily that it is the preferred place for these folks to stay.
This is where Elbers is hopefully going to make a difference. While he is Dutch, and the Dutch are some of the most direct-speaking people around the world, he was also loved by his prior staff. So much so that over 25,000 employees of KLM signed a petition in 2019 supporting that he stay on. At the time, there were talks that he would step down from the CEO’s position after completing his first term. One can only hope that his popularity will soar at IndiGo, and his Dutch directness will not become a cultural clash during his time in India.
International ambitions
IndiGo will also branch out beyond the middle-east and south-east Asia in the coming years. One of the biggest customers globally for Airbus, IndiGo also has the A321XLR on order, which is expected to enter the fleet in 2024. The A321XLR was announced in 2019 and will give IndiGo the narrowbody aircraft with the range to fly to Europe, deep into Africa and Japan. Elbers will be at the helm to guide the airline through this phase of its growth.
IndiGo is no longer the simpleton it was, flying one class of aircraft and picking up and dropping people from airport to airport. It has evolved into a network carrier and operates multiple kinds of aircraft (albeit the same family), including the 320neo, 321neo, the ATRs, etc. But one thing it has done very well is to still maintain one cabin inside the aircraft and sell sandwiches to people who want food.
This model works well for flights of 2-3 hours, but folks travelling internationally have different expectations. They want a more comfortable seat, inflight entertainment, a hot meal, and some. The IndiGo model started to break when it flew to Turkey with the hard product that works so well domestically.
Elbers will have to aid the product development for the XLR and make sure that it does the difficult job of keeping the product overwhelmingly simple like the rest of the fleet and also keeps the customers happy.
Ultimately, Pieter Elbers is one well-respected aviation boss, and IndiGo will be lucky to have him. The task for him, though, is cut out. To reinvent an already perfected model, maintain market share and gain international market share by creating new markets.
(Ajay Awtaney writes about Indian Aviation on livefromalounge.com and tweets from @LiveFromALounge)
