Forbes India – August 4, 2017

LeaderBoard

spreading its wings

A Suitor for the Maharajah

2.4 mln

i ternational passengers n air india

flew to and from india between

January and March 2017,

according to the directorate

g eneral of Civil aviation

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eager to spread its

wings and fly long haul,

no-frills airline IndiGo

has expressed interest in

acquiring the international

operations of Air India

(AI) after the Union

Cabinet on June 28 gave

an in-principle nod to

privatise the state-owned

carrier. IndiGo is the first

off the block in pursuit of

the Maharajah.

Rakesh Gangwal and

Rahul Bhatia, IndiGo’s

elusive founders, in an

hour-long conference call

with investors on July 6,

clarified that InterGlobe

Aviation, which runs the

airline, is interested in

AI’s international business

which includes the low-

cost arm Air India Express.

Given that AI’s

international business

comprises direct flights

to the US, UK, Europe,

Southeast Asia and

Australia, Bhatia was only

stating the obvious when

he said: “It [AI’s global

operations] would provide

[IndiGo] rapid entry into

restricted and, in some

cases, closed international

markets.”

As for AI’s domestic

business, Gangwal and

Bhatia say it will be

considered subject to how

the government presents

it to buyers—with as few

liabilities as possible.

IndiGo’s bid, if it

fructifies, will pave the way

for the airline’s entry into

long-haul international

routes, where AI is the

current leader with a 17

percent share of passenger

traffic, followed by Jet

Airways (14.53 percent)

and Dubai-based Emirates

(9.5 percent). IndiGo,

which flies to seven

short-haul overseas

destinations, has a 4

percent share of the pie.

With or without AI,

though, IndiGo is charting

its own long-haul flight

plan that will be low-

cost. “Full service [where

checked baggage, meals,

beverages and comforts

IndiGo has expressed interest in Air India’s global operations,

but if a buyout materialises brand AI may not survive

such as blankets and

pillows are part of the

ticket price] just does not

work for us,” said Gangwal

on the investor call, which

Forbes India was privy to.

In this scheme of

things, there is no room

for brand AI, which has

earned a name as a full

service airline. “I believe

the preservation of the

brand is the least item of

interest,” says brand expert

Harish Bijoor, founder,

Harish Bijoor Consults Inc.

“Emotion has no space in

[any] business, more so in

aviation,” he adds.

Sahara Group’s Air

Sahara, for instance, was

bought by Jet Airways in

2006-07 and was rebranded

as JetLite, which later

became JetKonnect. Later

JetKonnect was disbanded

and now there is only

one brand—Jet Airways.

Likewise, Vijay Mallya’s

defunct Kingfisher Airlines

acquired low-cost airline

Air Deccan in 2007, only to

kill the brand a year later.

But some argue that

there is a case to retain the

AI brand since it has been

India’s flag carrier for 70

years. “The government

should take an undertaking

from the new owner that

brand AI will continue,”

Jitender Bhargava, the

airline’s former executive

director, tells Forbes India.

Yet, if IndiGo’s plans

for AI is a template for

other potential bidders

to emulate, then looking

into the future, brand AI

may only be mentioned in

the past tense.

—anshUl dhaMiJa

16 | forbes india august 4, 2017

If IndiGo’s bid fructifies, it would provide the airline entry into restricted and closed international markets

IndiGo is charting

its own long-haul

flight plan that

will be low-cost,

with or without AI