The man behind InterGlobe and its flagship airline is all about enjoying every efficiency
Rahul Bhatia
Founder and MD, IndiGo
Age: 54
Rank in the Rich List: 5
Net Worth: $1.9 billion
The Big Challenge Faced in the Last Year: Rising cost of aviation fuel and weaker rupee were big challenges for the aviation sector, but IndiGo has stayed on course
The Way Forward: Rahul is unperturbed about competition from AirAsia and Vistara. He is keen on making a name in the hotels business
In early October, InterGlobe Enterprises, a $2.6 billion (revenues) travel and hospitality group, best known for its efficient budget airline IndiGo, will have completed 25 years. No huge celebrations are in store to mark the milestone. Group managing director Rahul Bhatia will address an all-staff meeting broadcast from InterGlobe’s headquarters in Gurgaon, near Delhi, and then it will be business as usual. “Why spend all that money?” shrugs Rahul.
Fanatical cost-consciousness has lifted IndiGo, a rank newcomer eight years ago, to the top of India’s airline market. As per August data tracked by India’s airline regulator, the privately held carrier that has carried 84 million passengers to date has a third of all domestic passengers (Rahul and dad Kapil Bhatia, InterGlobe’s executive chairman, own 51 percent). Media baron Kalanithi Maran’s SpiceJet, lately a discount warrior, is a distant No 2 with close to one-fifth share. Airline tycoon Naresh Goyal’s 21-year-old Jet Airways, co-owned by Etihad Airways, trails in the third spot. While SpiceJet and Jet have been racking up losses, IndiGo makes money and has been doing so since 2009. In the fiscal year till March 2013, the latest for which official numbers are available, it reported net profits of $130 million on revenues of $1.6 billion.
Though airlines in India were battered last year by the rising cost of aviation fuel and the weaker rupee, IndiGo is believed to have stayed on course with net earnings in the year till March 2014 estimated at $100 million.
“IndiGo has completely changed the concept of what a budget airline should be. Low cost need not mean low quality. I’m a huge fan,” says Deep Kalra, founder of online travel agency MakeMyTrip.com, which is a big seller of IndiGo tickets. IndiGo’s formula is to offer economy-plus service at economy rates and on-time performance that’s the envy of rivals. This fetish for punctuality has made it, despite its single-class offering, the airline of choice for the business crowd. “Being on time is a wonderful thing. In my experience IndiGo has been late only once—for 10 minutes,” says Manmohan Tiwana, founder of Wodehouse Capital Advisory, a Mumbai family office advisory firm. Tiwana travels on business every week and ditched Jet for IndiGo five years ago. He appreciates the “squeaky cleanliness” of IndiGo’s planes (average age: Under three years) and is happy to cooperate with the onboard crew as they collect all the trash from passengers before the aircraft lands.
Baby Steps to Perfection
A note in the onboard magazine asks passengers to pull the window shades down and rearrange their seat belts to the original position before leaving the plane. These small touches help the airline achieve quick turnarounds of less than 30 minutes between flights. “Operating a budget airline successfully is all about execution. IndiGo has delivered on that count flight after flight, day in and day out,” says Kapil Kaul, who heads the South Asian arm of airline consultancy Centre for Aviation.
That record is a feat in India, where the state-controlled aviation infrastructure has notoriously lagged rising air travel. While the situation has eased somewhat with the government handing over the running and rebuilding of key airports to private companies, capacity constraints are yet to be overcome.
For example, Mumbai airport has two runways and when one is shut down for maintenance, flight delays are inevitable. Lufthansa and Emirates are currently battling over time slots for the sole parking bay available in Mumbai for their A380 jets. “I often marvel at what we achieve despite all odds. But we want to deliver the India experience differently,” explains Rahul over lunch at L’Angoor, one of the four restaurants that this avowed foodie owns. For him, there’s no fussing over a menu or even much of a walk. The restaurant, whose name is a pun on the Hindi words for grape (angoor) and an Asian breed of monkey (langur), is in the same building as IndiGo’s office. While I sample a chilled melon soup—it’s a hot and muggy day in Gurgaon—Rahul restricts himself to a bowl of lentils. He has just returned from a five-week stay at an ayurvedic clinic in South India 22 pounds lighter, sporting a beard and a cropped haircut.
In 1994, InterGlobe snatched the franchise for what is now Galileo International, an airline reservation system once owned by United Airlines, which InterGlobe went on to represent in India. In 1999, they formed a joint venture with Galileo to provide back-office services. That venture is now a separate unit called InterGlobe Technologies with 6,000 people and overseas offices in China, the Philippines, Singapore, Dubai, the US and the UK. These businesses and a growing friendship with Rakesh Gangwal, a seasoned airline executive who worked at United before he went on to head US Airways, prepared the ground for Rahul’s next leap. Old associates say Rahul often spoke of his dream of starting an airline that he wanted to name IndiGo. But he waited until Gangwal agreed to partner with him. “Gangwal was hesitant because of the high mortality rate in the business. But I’m a persistent guy,” says Rahul, who credits Gangwal equally for IndiGo’s success. (US-based Gangwal, who owns an estimated 48 percent of the airline and is more reclusive than Rahul, declined to comment for this story.) IndiGo got its airline licence in 2004, but didn’t take off until 2006.
(This story appears in the 17 October, 2014 issue of Forbes India. To visit our Archives, click here.)