Why IndiGo expressing interest in Air India sounds both bizarre and brave

IndiGo President Aditya Ghosh wrote a letter to govt expressing interest in buying Air India

Last week another strange development took place in the aviation sector. The ink had barely dried on Cabinet’s in-principle decision to sell national carrier Air India when IndiGo president Aditya Ghosh shot off a letter (the same evening in fact) to the government expressing its interest to buy the carrier, waxing eloquent on how it was best placed to do so and so on.

The letter struck me – and several industry insiders – as very odd and didn’t quite ring true. One, the letter came within hours of the decision and found its way happily into the Whatsapp groups of most aviation reporters in the country. Surely if there was any serious intent, both the government and IndiGo wouldn’t want it broadcast the way it was. Aren’t buy-outs and takeovers usually pretty hush-hush? Ghosh might as well have called the TV channels over and announced his interest over the airwaves. 

Second – quite uncharacteristic of IndiGo and its promoter’s style – the move was highly premature. As anyone who has been observing governments can testify, an in-principle decision by a government is just that and nothing more. There are several hills, streams and mountains to be crossed before Mohammed can actually get to the mountain. There are no modalities of the proposed sale as of now. I don’t think anyone – and I mean anyone – can currently tell you whether this sale will actually see the light of day and if so in what form. So the speed with which IndiGo decided to express its interest seems rather desperate. It’s hardly as if the first guy who expresses interest will be the chosen one.

So I am assuming someone in the government came up with the idea of asking IndiGo to show some interest – possibly to ignite some interest in others. After all, if IndiGo is thinking about it, maybe there is something worth thinking about.

Anyway, let’s for a moment take IndiGo’s word for it. On the June 28, it was interested in acquiring all of Air India and Air India Express operations. A few days later – after the markets reacted adversely – it had watered that down to the international operations of the airline. What on earth does that mean ? Does it mean the government should look for a separate buyer for the narrow bodies? 

Anyway, let’s not quibble over details. As I said, it’s early days yet. But anyone who has spoken to or followed the thinking of IndiGo promoter Rahul Bhatia would find this hard to swallow since all through Bhatia has maintained that he would stick to a single fleet, low frills model. That has sort of been the cornerstone on which this airline was built.

But then IndiGo already broke ranks when it decided to add 50 ATRs to its fleet to go regional. And now it is proposing to buy Air India – with its delightful khichdi of airplanes and 30,000-odd employees including contractual staff – to go international.

This brings me to another point. Whenever an airline in India has so far taken over another, it has resulted in disaster. I don’t know if readers remember a small airline called NEPC (it was doing quite all right on its own). Then NEPC bought Damania and It was the last we heard of both. Kingfisher and Deccan? Both recent history. Jet bought Sahara, almost became history, was saved by the skin of its teeth but is still paying for the mistake. Even the merger of the two government airlines – Air India and Indian Airlines – has been anything but happy. I can also give around 10 international examples of failed takeovers but this would need another column. Faced with this fact, what can one say to IndiGo other than all the best.

I have another question. What makes IndiGo’s promoters feel that there is a market for long haul, no frills flying (a new unknown creature by and large) if that’s what they are planning to offer? Yes, there is Air Asia X but they should note that it is a separately listed public company with a different CEO, board and management. Sure, there are people all over the place trying things out but the model remains largely unproven.

This brings me to my final question: If indeed IndiGo sees a future in long haul no frills, why not just set up a new airline? Grow organic. Ask any airline expert, CEO, analyst, professional and he will tell you that starting a new airline is a much easier task than buying something that already exists and needs to be fixed. 

And needs to be fixed is of course putting it mildly in the case of our famed national carrier. Fixing Air India is something I wouldn’t wish on my worst enemy.