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IndiGo makes first move in pursuit of the Maharajah

IndiGo has expressed interest in Air India's global operations, but if a buyout materialises brand AI may not survive

Published: Jul 29, 2017 06:49:10 AM IST
Updated: Jul 27, 2017 11:57:10 AM IST

IndiGo makes first move in pursuit of the Maharajah
If IndiGo’s bid fructifies, it would provide the airline entry into restricted and closed international markets
Image: Vivek Prakash / Reuters

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 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.

(This story appears in the 04 August, 2017 issue of Forbes India. To visit our Archives, click here.)

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