Rakesh Gangwal: The aviation industry disciplinarian behind IndiGo’s huge success

Rahul Bhatia and Rakesh Gangwal, the two men who have steered IndiGo’s fortunes as co-founders over the years, are part of Indian corporate legend. While only Bhatia is left in the pilot’s seat, Gangwar’s personality is more interesting, especially since he decided to exit the company he helped build when it was in its prime.

The aviation industry veteran attended Don Bosco School in Kolkata and then studied engineering at the Indian Institute of Technology in Kanpur. His early career was with Philips India, which was considered a blue-chip employer at the time, and with Ford Motor Company in the US.

He then spent time at Booz Allen Hamilton, where Eli Lilly was a client. Inspired by the pharmaceutical giant, Gangwar returned to India to set up a capsule manufacturing company. But Indian bureaucracy stymied his efforts.

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Gangwal flew back to the United States and built a reputation as an aviation industry expert with experience at United Airlines and Air France. He subsequently took over as CEO of US Airways and served as CEO of Worldspan Technologies, a travel technology and information services company, from 2003 to 2007.

He returned to India with an entrepreneurial idea that would change the face of the Indian aviation industry. At the time, India’s aviation market was dominated by gold-plated airlines such as Kingfisher and Jet Airways, which discovered too late that their balance sheets were full of hard data rather than goodies.

IndiGo, under the guidance of the extremely cost-conscious Gangwal, has chosen a different flight path, characterized by tight cost control and streamlined operations while providing on-time flight schedules to passengers. This approach was so successful that the low-cost airline model took root in India, forcing even full-service airlines to compete on price and punctuality. The IndiGo co-founders went on to pioneer other cost-saving measures, such as bulk ordering aircraft from a single manufacturer on a wet lease basis.

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second wind

Gangwar once compared the aviation business to a candle lit at both ends, meaning the window of opportunity to make money is limited. But he built on IndiGo’s early success and led the airline to a preeminent position in the Indian market at a time when heavyweights such as Jet Airways, Kingfisher and Go First had gone into liquidation.

But just when IndiGo seemed to be soaring, the pandemic hit and wreaked havoc on the aviation business. Not surprisingly, IndiGo is in the red. Meanwhile, its only serious rival, Tata Group, has strengthened its aviation capabilities by acquiring government-owned Air India, which had long since become a white elephant.

But the biggest setback for IndiGo came when Gangwal announced in February 2022 that he would be leaving the company he helped found and gradually selling off his stake. While Gangwal has been expressing concerns about corporate governance issues for some time, differences of opinion over how the company is being managed appears to be the immediate cause. For someone who refuses to buy discounted tickets from friends and family, this is a deal breaker.

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While Gunwal may have left the aviation industry, the aviation industry is in no mood to leave him. Earlier this year, he joined Southwest Airlines’ board of directors, as the U.S. low-cost carrier faces growing pressure from activist investor Elliott Management for leadership and strategy changes.

A few months later, Gangwal kept true to his word and acquired 3.6 million shares of the US airline for $108 million. Southwest shares have risen nearly 10% in the past six months since Gangwal joined the airline’s board.

Gangwal will keep a close eye on the number as it will serve as a guide to the airline’s performance.

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Why pamper customers?

The money Gangwall makes from Southwest Airlines will be the least of his concerns. His net worth may be $5.6 billion, according to Forbes, but his attitude toward wealth hasn’t changed over the years.

Gangwar is not averse to wearing old hand-knitted sweaters, he has few hobbies and his lifestyle remains that of a typical Jain family in Kolkata. So, in 2015, Gangwal and his wife Shobha bought an 80,000-square-foot house. Charles Johnson, the retired founder of Franklin Templeton Funds, surprised many when he spent $30 million to build this home in Miami Beach.

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Tarun Shukla, in his fascinating book Sky High: The IndiGo Story, provides great insight into the man’s attitude: “Gangwal saw no need to look after customers with extras. ” Airplane Your piano may look beautiful, but will it add to your bottom line? New ideas abound, but have little commercial value. It’s like a disease – get excited and introduce frills from lounges to frequent flyers to everything else – and then never recoup the costs incurred. “

If only the likes of Vijay Mallya (Kingfisher Airlines) and Naresh Goyal (Jet Airways) would heed these words.