How IndiGo CEO sees aviation shaping up amid worst crisis in history

Dutta is convinced that no matter where we find ourselves today, one cannot go wrong with the Indian aviation market

In 2002-03, when Jet Airways was at its peak but beginning to smell competition, Air Sahara was trying to stabilise its ship and IndiGo was still in embryo stage, the founders of all three airlines — Naresh Goyal, Subrata Roy and, subsequently, Rahul Bhatia — tried to convince Ronojoy Dutta, better known as Rono Dutta, to take over the reins in India. 

At the time, the joke in Dutta’s family was that the mishti doi (Bengali sweet yogurt) that Roy plied him with did the trick and that’s how he ended up spending four years (2004-2008) at Air Sahara.

Almost 15 years later, when Bhatia needed a new CEO to steer his strong ship into fresh waters, Dutta was again the man he approached. This can be seen as either a testimony to Dutta’s expertise or an indication that even today talent remains just as elusive in India’s aviation sector.

Dutta’s appointment to IndiGo in January 2019 was a controversial one, coming amidst the airline’s worst internal crisis: a break of trust between the two founders, Rakesh Gangwal and Bhatia, both well known to Dutta.

Dutta and I had met a couple of times when he was with Air Sahara, and are now reconnecting for a Zoom chat. It’s late morning and we both opt for water over tea or coffee, preferring instead to let his life’s journey add flavour to the conversation.

After completing mechanical engineering from IIT Kharagpur, Dutta left for Harvard Business School on a scholarship for tuition. But to meet other expenses, he worked as a security guard from midnight to 5 am, every day. Later, when he was at Booz Allen, Gangwal, who’d also worked at the consultancy, called him to join United Airlines.

Working on a variety of assignments within the carrier, from 1985 to 2003, he learned the nuts and bolts of the airline industry, focusing a lot on strategic planning. It was post 9/11 that he started working more closely with airlines going bankrupt — Air Canada, US Airways and Hawaiian — and earned a reputation as a turnaround expert.

In 2003-04, when he had come to Kolkata for a nephew’s wedding, Roy flew down to meet him. It was Bhatia who connected the two. How he managed to convince Dutta to come aboard, leaving his family behind in the US, is anyone’s guess. At the time, Air Sahara’s fleet was very old and Dutta immediately realised they couldn’t run a profitable ship with it. But when the management decided against replacing the aged fleet, Dutta suggested selling the airline, which is what eventually happened.

His assignment at IndiGo, however, faces no such challenges. IndiGo has a very young fleet and its founders are bold. Being bold has meant lower prices on aircraft purchase and staying young has ensured lower engineering costs — two factors that have given IndiGo an edge over others.

On the subject of low-fare carriers, I ask him whether he thinks there is any space in the domestic market for a full-service airline. Can a price-sensitive market like ours support a Vistara or an Air India? The advent of this new animal is the one big difference from his previous stint in India.

He doesn’t think so, and explains: For up to three hours on a flight, the human body doesn’t need anything and passenger’s choices are driven only by schedule and price. “I don’t need that wet towel, meal or blanket. I don’t need to stretch out. I just want to be left alone to do my work or read my book.” As he sees it, the Indian domestic airlines have no scope for charging a little extra for this or that. “Why would I pay even Rs 200 more for something I don’t value?”

In normal times, I might have delved deeper into this discussion, but times are anything but normal and I want to get to the gigantic elephant in the room: The Covid crisis. Has aviation seen a bigger crisis since when the Wright Flyer took off in 1903?

In his view, past crises — SARS, Ebola, 9/11 — pale in comparison. Those were short-lived, episodic or spatially limited. “Worldwide stoppage of all flights. Who would have imagined this!”

Consequently, he sees fundamental alternations in the way things work once the world gets back to normal. Business traffic will shrink globally. Demand will fall, but so will supply. One-stop connecting traffic will take a hit, and when passengers do stop, they’ll prefer a domestic hub to one overseas. The global situation is already reflecting these structural changes. Prices of wide-bodied planes have taken a beating, while those of narrow bodies are holding up.

So when does IndiGo expect to be doing long-haul stretches out of India, a subject of much debate? The Indian authorities have been asking the airline to take the plunge but have sensed reluctance. Why?
 

The airline going international, he says, is inevitable but wide-bodied airplanes are “dangerous animals”. Unless you provide the proper feed (infrastructure and network), you get killed. Jet Airways, Kingfisher Airlines and Air India are cases in point. If Jet, he argues hadn’t had the “escapist” policy — domestic competition is getting tough, let’s fly to London — and had instead faced the competition head-on, it would have survived.

You have to get 60 per cent of your traffic connecting to your hub to succeed in the international space, he says. Mumbai-London operation, for example, will work if you can get at least 60 per cent of your traffic from the rest of the cities in India. When United connected Chicago to London, for example, it had 65 per cent of its traffic coming in from all other American cities. Similarly, when British Airways linked London to Chicago, it had 65 per cent of its traffic from Oslo, Paris and other European cities. The reason this works is that competitors then don’t need to compete “ferociously” and access the other’s 65 per cent.

And then, the entire ecosystem has to be geared for smooth international movements, something Indian airports are wanting in. “It is unconscionable to expect passengers coming into a country after a long flight to make their way between terminals as currently happens in India,” he says. IndiGo wants these gaps rectified before it takes the plunge. Treading with caution is the way forward.

On a happy note, he’s convinced that no matter where we find ourselves today, one cannot go wrong with the Indian aviation market. With only 5 per cent of the travelling public exposed to air travel, he is confident India’s traffic growth will be explosive. So for airlines like IndiGo, there is nowhere to go but up.