Rahul Bhatia in command: Rakesh Gangwal resigns as IndiGo director, to reduce stake over next 5 years - Times of India

Rahul Bhatia in command: Rakesh Gangwal resigns as IndiGo director, to reduce stake over next 5 years – Times of India


NEW DELHI: IndiGo co-founder and promoter, Rahul Bhatia, will now have complete control over India’s largest domestic airline.
Rakesh Gangwal, who along with Bhatia had started IndiGo at the start of this Millennium but had a serious fallout in last few years, on Friday resigned as director from the board of the airline’s holding company, InterGlobe Aviation.
Gangwal will reduce his stake gradually over the next five years.
The Gangwal and co-founder Rahul Bhatia groups collectively hold 74.4% stake in the airline almost equally.
Gangwal’s resignation and decision to dilute his stake paves the way for Bhatia’s complete control over the airline — which is the largest domestic player with over half the market share — and is now preparing to expand its international network majorly. It also throws opens the possibility of a new investor coming in.
Qatar Airways Group chief Akbar Al Bakr has for years been saying he wants to invest in IndiGo whenever “good friend” Bhatia is open to such a partnership.
With the recent acquisition of Air India and AI Express by Tatas, Bhatia’s next step to take them on is keenly awaited.
Gangwal and Bhatia had for years been locked in a bitter legal battle that is now coming to an end with the former taking a back seat.
Bhatia had earlier this month been appointed IndiGo’s managing director.
The airline is preparing to take on the mega Tata airline grouping which now has four carriers in its fold — Air India, AI Express, AirAsia India and Vistara.
In a letter to board members, Gangwal said: “I continue to be a big believer in the long-term prospects of IndiGo and more so now with the industry consolidation underway… I have been a long-term shareholder in the company for more than 15 years and it’s only natural to someday think about diversifying one’s holdings. Accordingly, my current intention is to slowly reduce my equity stake in the Company over the next five plus years.”
“…a gradual reduction of my stake should also allow me to benefit from some of the upside. Like any plan, future events may impact my current thinking. However, I am concerned about the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information (UPSI)…. After considerable thought, I see only one clear path to address this issue. Regrettably, and effective immediately, I am stepping off the Board,” Gangwal said.
The co-founder has, however, not ruled out the possibility of returning at a later date. “Sometime in the future, I shall consider participating again as a board member,” he added.
IndiGo under Bhatia is drawing up plans for the medium to longhaul market. It will start getting single aisle Airbus A321 XLR which have the range to fly nonstop to Europe (not UK) and far east from India, starting mid-2024.
The no frills budget carrier will have ovens on the XLRs to serve real hot food — as opposed to keep-poha-in-hot-water-for-7-minutes — and in-seat chargers.
Closer to this product launch, some surprises could be in store for flyers.
The current aviation scenario in India shows two big players — IndiGo possibly with a new “partner” and Tatas with their four airlines. They both have their strengths — IndiGo’s low cost structure and dominance of domestic and nearby international market and Air India’s global network.
Tatas will work on increasing their domestic market share as the same is needed to fill up wide bodies leaving for rest of the world — like Emirates and Qatar Airways flying several flights from India and using that feed through a scissor model to fill up their big planes flying nonstop to rest of the planet. Tatas will order more single and twin aisles soon for the expansion.
IndiGo has the required domestic feed but not the slightly more comfortable product that passengers of longhauls require. Eating sandwiches on 8-hour flight is not exactly very droolworthy. They are working on the XLR product that will hopefully address the comfort issue.


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