The IndiGo Story: Inside the Upstart that Redefined Indian Aviation

by Shelley Vishwajeet

The uniqueness of IndiGo comes with its ability to listen and adapt to what the new generation of Indians want from air travel.

The uniqueness of IndiGo comes with its ability to listen and adapt to what the new generation of Indians want from air travel.

The footprints of regional aviation, which is very much the focus of the government now, was laid by the then rulers of Jodhpur, Gwalior, Indore, Mysore and many others

like them. The colonial government at the time was inclined to develop aerodromes at only those places which were of administrative and strategic importance to it.

Legend has it that J.D. Choksi, the legal adviser of Tata Sons then, suggested redrafting the terms of profit sharing which, in effect, would have drastically cut Nevill’s profit percentage. J.R.D., after

pondering over it for a few days, however, took the conscientious decision to retain the original contractual terms. He opted for the ethical treatment of his partner rather than getting swayed by narrow commercial considerations. That was J.R.D.!

Moreover, by remaining aligned with the government, J.R.D. protected the larger slice of

the Tata empire from the government’s backlash which was not keen on providing much support to private enterprises.

restless entrepreneur, he kept giving shape to ideas which were truly pioneering and visionary for their time. Seth Hirachand established India’s first modern shipyard, set up the country’s first car factory—Premier Automobiles (which made Fiat cars in India)—near Mumbai and was also a major sponsor of India’s first homegrown news agency, Free Press of India, which he co-founded with Annie Besant and M.R. Jayakar.

Seth Walchand was also the main founder of India’s first aircraft manufacturing factory, Hindustan Aircrafts Ltd. (HAL), which commenced production on 23 December 1940.

Not many Indian politicians get an obituary in The New York Times.

By 1953, global aviation had already taken off in a big way. Starting 1950, international air traffic grew in double digits every year till the first oil crisis of 1973. Sadly, India had missed the flight due to its prolonged restrictive policies. Air traffic growth and connectivity remained abysmally low in India. It will take another forty years for the Indian aviation to resurrect again.

The nationalization of Air India is often seen as an undesirable and myopic move by then socialist Prime Minister Jawaharlal Nehru to stymie the growth of private enterprise and unleash his version of socialist economy.

The massive aviation take off was primarily the result of economic surge that happened between 1950–1970, a period which is also referred to as ‘The Golden Age of Capitalism’.

The average length of a flight doubled from 903 kilometres in 1950 to 1,816 kilometres in 2000,29 but it has not

changed much since then—with 1,827 kilometres in 2012.

Southwest has never made a loss in its entire history; not even in the aftermath of 9/11 when air traffic dropped by as much as 30 per cent for three months after the catastrophe, even bankrupting the bigger airlines of the day like United Airlines and US Airways.

However, it

is the only airline among the biggest ten worldwide whose market capitalization is more than its annual revenue, reflecting the robustness of its business model amongst other things.

American Airlines had a revenue of $41 billion in 2016, but its market capitalization was only $21 billion; Delta clocked a revenue of $40.5 billion in the same year, but its market capitalization was $34.4 billion; Air France-KLM’s valuation has particularly suffered in recent years and in the same period, it was valued at $2.7 billion, despite an impressive revenue of $30 billion...

What adds more reverence to the Southwest phenomenon is the fact that this airline was not created by some airline professionals with Ivy-league management degrees to boot...

millions in a promising business venture, but by people who had their basics clear and maths right. There was nothing like a start-up fund or angel funding when Southwest began its innings. King was a relatively wealthy man but not really a moneybag. Kelleher was a bright lawyer, but had no prior experience of the aviation sector or even aviation laws to begi...

Kelleher had less than 2 per cent stake in the airline when Southwest was formed. He was a member of the company’s board and took care of its legal aspects. It was Kelleher’s tenacity and legal acumen which ultimately ensured Southwest’s flight against many odds. The bigger, established airlines feared that their huge profit per...

would cost the passengers almost half of what they were charging. The founders of the nascent airline had all but given up hope of ever commencing operation. But Kelleher’s relentless pursuance of the legal bottlenecks for four frustrating years at various forums ultimately won the day for Southwest. On 18 June 1971, Southw...

Kelleher was later elevated as the chairman of the Board and went on to become one of the most successful CEOs in the aviation history, while King slowly exited from the airline he had founded due to increasing disagreements with the Board over the affairs of the airline. Under Kelleher, Southwest clocked twenty-seven years of co...

Southwest’s much celebrated no-frills, low-cost model has been replicated around the world by numerous LCCs such as Ryan Air, easyJet and AirAsia. IndiGo too owes much of its inspiration to Southwest. So, what was it about Southwest’s model and philosophy that made it a rock star and inspired airlines around the globe?

King had also started noticing with keen interest the success of some airlines, particularly the California-headquartered Pacific Southwest Airlines (PSA), which called itself ‘America’s first discount airlines’. The airline offered just basic flying services without the frills such as free meal, alcohol, etc.

Flying had also become a necessity and the need and psychology of flyers was also changing. On a short-haul flight (less than two hours), did an average flyer really bother about a free meal or drink? If they did, how much money would they be willing to pay? King was able to figure out that in the short haul, people basically cared about reaching from one point to another in a timely and safe manner.

What also worked initially in favour of Southwest was the fact that Texas is a huge state—the second largest state after Alaska, area-wise, and also the second most populous after California. In terms of size, it is larger than all European countries except Russia.

It is over 10 per cent bigger than France and almost twice as large as Germany or Japan. Its top seven cities—Houston, San Antonio, Dallas, Austin, Fort Worth, El Paso and Arlington—are spread far and wide. The longest straight-line distance in the north-south direction is 1,289 km and the widest east-west distance is over 1,...

Southwest was initially permitted to fly only w...

(c) ‘no frills’ didn’t mean cheap or lackadaisical service.

Point-to-point service rather than a hub-and-spoke model continues to be its strong point which allows it to have quicker fleet turnround.

The airline continues to have faith in a single class of aircrafts—Boeing 737-800 and Boeing 737 MAX 8—only.

The airline doesn’t believe in hiring people with fancy management degrees for any position, especially freshers. It believes that real learning happens on the job and not in the classroom.

From carrying 82,000 passengers in 1985—the first year of its operation—to ferrying 130 million in 2017, the flight of Ryanair has been anything but mind-boggling.

In 2017, Ryanair operated more than 2,000 daily flights from 215 destinations in 36 countries.

Still, it was not smooth sailing for Ryanair for the next six years. The airline kept struggling to keep itself afloat till its maverick financial adviser and board

member Michael O’ Leary was given the command to sail it to profit zone.

but also as the one who needs little invitation and no cajoling to provide a stream of invective on just about anything that appears to stand in his way’,

His logic was simple—one could not be charging nearly half of what the others were charging and still make money while providing all the facilities and frills that a full-service airline provided. He figured out that one could not be a FSC and charge LCC price.

One of the core decisions he took was to continue future operations with one type and one class of aircraft in order to cut down on training and maintenance costs.

In 2014, Ryanair launched an ambitious running program called ‘Always Getting Better’,39 which focused on improvements on every operational front with greater customer satisfaction as the core objective. A wide range of customer service and digital enhancements such as a new website and app, new uniforms and cabin interiors, allocated seating and tailored business, and leisure and family products were launched in the first four years of this programme.

Ryanair has an open offer in this regard—‘Find a cheaper fare and we’ll refund the difference + €5 to your “MyRyanair account”!’40

Stelios Haji-Ioannou—a young scion of a wealthy British Cypriot family. EasyJet, stylized as easyJet, commenced its operation in 1995 with the motto, ‘Making flying as affordable as a pair of jeans’.

What Sir Richard Branson’s high visibility and shrewd mnemonics couldn’t do was achieved by the low-profile but steadfast implementation of clearly laid out business plans by Sir Haji-Ioannou.

In 2010, the airline’s Board took two radical decisions, much to the displeasure of its founder. The first decision—a startling one—was to bring in Carolyn McCall,42 a person who has had no prior exposure to the airline industry, as the

company’s CEO. McCall was a media professional and had spent the last twenty-four years at The Guardian.

Both decisions proved judicious for easyJet in the years to come. Carolyn Julia McCall, DBE, brought about a transformational change in easyJet. Her initiatives not only helped the LCC up its game, but also forced other carriers to raise their bar.

McCall proved to be a highly dynamic CEO who steered the airline to great heights.44 Before she left easyJet in 2017, she had already etched her name as one of the most successful airline CEOs in aviation history. During her seven-year tenure, easyJet’s passenger numbers almost doubled, while shares of the airline jumped four times till a year of her departure. In 2017, when most European airlines in general were not doing too well, easyJet remained the second most profitable low-cost airline in the continent and the third most profitable airline overall, despite a significant fall in profits.