recovered after the reported truce.Unlikely Friends
The friendship between Bhatia and Gangwal dates back to
1985, when the two first met at the Chicago headquarters of
United Airways where Gangwal worked for 10 years – even
working alongside IndiGo’s current CEO Dutta who, Gang-
wal says, is Bhatia’s man – before moving on to other assign-
ments in Air France and US Airways Group (where he was
chief executive and chairman). In 1994, the IGE Group got
its first big break when it became the local agent of Galileo
International’s global distribution systems (GDS), a ticketing
platform owned by United (during that period), where Gang-
wal was working at a senior position.
Both have different personalities. Gangwal pays atten-
tion to details and is obsessed with cutting costs, which has
helped IndiGo stay profitable. An otherwise quiet Gangwal
is aggressive in negotiations. Bhatia also prefers a low pro-
file, but has a strong grip over commercial and regulatory
aspects of the airline business.
Unlike promoters such as Jet Airways’ Naresh Goyal,
who were allegedly inf luential in framing of the restrictive
5/20 rule and capping of foreign direct investment in the
sector, Bhatia is understood to have risen without inf luenc-
ing government policies. Even if Bhatia has overwhelming
rights and doesn’t have to dilute those in favour of Gang wal,
experts say the entire matter is under government scrutiny,
which may have forced the partners to reach a settlement,
even if it’s temporary and meant for optics. “It will be a big
reputation loss for IndiGo if the government decides to
probe it further. The mindset of government agencies is to
catch the tiniest of faults. No promoter would want to go
down that road,” says Singhi.
It’s unlikely that the two of them – who once holidayed together – will
ever sit under the same roof again or break bread to sort out their dif-
ferences, given the nature of the unpleasant things both have said about
each other.Private Affairs
IGE Group claims that related party transactions account for just 0.53
per cent revenues of IndiGo and the airline has received more favour-
able treatment from IGE Group entities as compared to their other cus-
tomers. Related party transactions with Bhatia’s private entities can be
a small part of IndiGo’s overall revenues, but experts argue it may not
be the case with the IGE Group. Among the four areas of related party
transactions, simulator training to IndiGo’s pilots contributed the high-
est – `96.48 crore – to the IGE Group’s revenues in 2018/19, followed by
crew accommodation at hotels (part of a joint venture between Accor
Hotels and IGE Group), general sales agent services and real estate prop-
erties leased out to IndiGo.
“There’s a fine line as far as ethics is concerned. In case of related party
transactions, the beneficiaries believe it’s a small thing. Should the quan-
tum matter or the practice?,” asks Jitender Bhargava, former executive di-
rector at Air India.
Not much is known about Gangwal’s other sources of income, but Bha-
tia’s IGE Group has been fairly active in different lines of business. In fact,August 25I 2019 I BUSINESS TODAYI 65July 20 18
IndiGo’s Chief Com-
mercial Officer, Sanjay
Kumar, quits; replaced
by William Boulter (in
pic), who was the
chief strategy officer
December 20 18
Taylor, who was
the common
choice of Bhatia
and Gangwal, quitsJanuary 20 19
Ronojoy Dutta,
a man believed
to be close
to Bhatia,
appointed CEOMarch 20 19
IndiGo’s Chief Planning
Officer, Michael Swiatek,
who was involved in
designing the interna-
tional network, leavesbecame public in May, he has been
brushing it off, saying the difference is
over just “one issue”. Dutta learnt crisis
management during his stint at United
Airlines where he was president dur-
ing the 9/11 terror attack. Two United
planes were involved in the attacks,
and for the next one year – till the time
the airline filed for bankruptcy – Dutta
had to manage the worst nightmare in
the history of the aviation industry.
Now, he is doing everything to make
things look normal at IndiGo.
Following Gangwal’s letter, the
IndiGo stock tanked as much as
13.5 per cent in two days, prompting
the IGE Group to assuage investors’
worries. It has since then engaged in
shaping up the narrative in favour of
Bhatia, while simultaneously trying
to bring things under control. Gang-
wal, on the other hand, has been
talking sparsely, though the stock has