Rakesh Gangwal: High-Flyer
Despite India's aviation industry having been through a turbulent phase in the last decade, it has achieved stability and growth and is now poised to scale greater heights. As per estimates, airline capacity in India will reach 230 million departing seats in 2024, which is double that of 2014. Domestic airline capacity in the country has always grown at a faster rate compared to international capacity. Domestic capacity averages 8.7% growth annually compared to international growth of 6%. However, foreign-based carriers have shown their ability to successfully operate internationally from India. In the past, as per government policy, carriers had to operate in the domestic market first before permission was granted to operate international services.
Considering the potential for India's domestic aviation market to continue to grow and serve the world’s largest population, and the prospects for outbound services to take off, Rakesh Gangwal, who was then working at United Airlines in the US, met Rahul Bhatia of InterGlobe Group in the mid-2000s and held discussions. They decided to pool their skills and expertise to create a successful Indian airline. Thus, their collaborative effort created the largest domestic airline company in India in 2006. Gangwal, an Indian-American billionaire and Indigo co-founder, previously worked for US Airways Group as CEO.
Education And Early Career
Rakesh Gangwal, born in 1953, studied in Don Bosco School, Beniapukur, Kolkata. He joined the Indian Institute of Technology Kanpur in 1975 to study for a Bachelor's in Mechanical Engineering. Thereafter, he earned an MBA at the Wharton School of the University of Pennsylvania. After completion of his Bachelor's degree at age 23, he moved to the US in 1977. His airline industry career took off in 1980, when, as an associate of Booz Allen & Hamilton, Inc, he worked closely with United Airlines. In 1984, he joined United Airlines as manager for strategic planning. He worked in various capacities at United Airlines. Earlier, he served as executive vice-president for Air France in 1994. Prior to that he was associated with Ford Motor Co. as a financial analyst and Philips India Ltd. as a production and planning engineer.
IndiGo Takes Wing
Belonging to InterGlobe Aviation Ltd., IndiGo is a low-cost Indian airline, with its headquarters in Gurugram in Haryana. The airline was founded in 2006 by Rahul Bhatia of InterGlobe Enterprises and Rakesh Gangwal, a US-based Indian expatriate. In terms of passengers carried and fleet size, it is the largest airline today in India, with a 62% domestic market share. As per company sources, it is the largest individual Asian airline that carried more than 100 million passengers in 2023.
Originally, InterGlobe had a 51.12% stake in IndiGo and 47.88% was held by Gangwal's Virginia-based company, Caelum Investments. IndiGo placed an order for 100 Airbus A320-200 aircraft in June 2005, with plans to begin operations in mid-2006. The airline took delivery of its first aircraft in July 2006 and commenced operations in August, with a New Delhi-Imphal service via Guwahati. By 2007 nine more aircraft were acquired, and in December 2010, IndiGo replaced state-run carrier Air India as the third-largest airline in India.
In 2011, IndiGo placed another order for 180 Airbus A320 aircraft at $15 billion. In the same year, upon completion of five years of operations, the airline was permitted to launch international flights. In 2012, IndiGo proved to be the most profitable airline in India, attaining the status as the second-largest airline in the country in terms of passenger market share. In 2015, it placed a further order for 250 Airbus A320neo aircraft worth $27 billion, making it the largest single order ever in Airbus history. In the following year, it became the second-largest low-cost carrier in Asia in terms of seats flown. In 2019, IndiGo placed an order for 300 Airbus A320neo aircraft worth $28 billion, and the airline became the first Indian airline to operate 1,500 daily flights. In the late-2019, it became India's first airline to own 250 aircraft. Within a short span of time thereafter the airline's fleet size increased to 300 aircraft.
In early 2023, the airline inducted into service its first wide-body aircraft, a Boeing 777-300ER to its fleet. In the same year, the airline created aviation history when it placed an order for 500 Airbus A320neo family aircraft in mid-2023. Today, IndiGo operates more than 2,000 daily flights to 122 destinations, of which 88 within India and 34 abroad. The airline has its main base in Delhi, with smaller bases in Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Kochi.
Business Spat
In 2022, a business disagreement between Bhatia and Gangwal made the latter to inform the IndiGo board to gradually reduce his stake in InterGlobe over a period of five years. The dispute between the co-founders began in 2019 when Rakesh reportedly wrote to the Prime Minister’s Office (PMO) and the Securities and Exchange Board of India (Sebi) regarding the alleged involvement of his partner Bhatia in certain "questionable related-party transactions" between InterGlobe Aviation and Bhatia group entities. Bhatia denied all the allegations of such transactions. The two founders also differed over the strategy for IndiGo’s growth. The duo has since been locked in a battle over the running of the airline. Gangwal has recently sold a significant portion of his stake in the airline's parent company, InterGlobe Aviation, through a block deal. Along with the Chinkerpoo Family Trust, Gangwal sold 22.5 million shares at Rs 4,714.90 each, which amounted to around $1.3 billion (Rs 9,549 crore). The sale represented roughly 30% of Gangwal's total stake in IndiGo. Before the transaction, he owned 5.89% of the company, while the Chinkerpoo Family Trust held 13.49%. His wife, Shobha Gangwal, exited the airline completely in August 2023.
Awards And Achievements
Rakesh Gangwal has received numerous awards and accolades. He was ranked No. 359 in the Forbes 400 list of the Richest People in America in 2020. Also, Gangwal was recognized for his philanthropic efforts when he donated Rs 100 crore to set up a school of medical sciences and technology at IIT-Kanpur in April 2022.
Last month, Southwest Airlines invited aviation veteran Gangwal as director. The airline operates in the US on a low-cost model. Speaking about his joining the board of Southwest Airlines, Gangwal observed: "Together with the rest of the board, I look forward to supporting the company's strategic direction and building on its well-earned reputation as one of the world's most admired and reputed airlines."
Rakesh Gangwal's legacy lies in his immense contributions to the aviation industry, particularly through his co-founding IndiGo Airlines.
(Photo: Courtesy IndiGo Airlines)
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