Last Man Standing

Every travel agent dreams of starting an airline, says Rajji Rai, President of the Travel Agents Association of India, India’s leading travel agents body. “Only two who started in the travel agency business, Rahul Bhatia and Naresh Goyal, have actually succeeded,” he adds.

Even if Goyal’s star has lost some of its twinkle in recent years, Bhatia’s seems to be on the ascendant. His airline IndiGo is now the most profitable in the country.

Not much was known about its profitability, as the company is not obliged to make its numbers known. Civil aviation minister Praful Patel revealed some of the financials this November in a reply to a parliamentary question. Low cost carrier (LCC) IndiGo and the much smaller regional carrier Paramount were the only two airlines in India that had made a profit in 2008-2009. IndiGo made Rs. 82 crore, while Paramount notched up Rs. 7 crore.

Running an airline today is more excruciating than getting a root canal without anesthesia. Bhatia stands among the few who are not flinching. Rai, whose office at Connaught Place in New Delhi was right next to Bhatia’s in the early days, counts himself among Bhatia’s friends from that time. “He has done astronomically well,” says Rai.

In a business meant for the big boys Bhatia has surprised everyone. Though the last of the networked carriers to take off in 2006, IndiGo is now India’s largest LCC. Its offering focussed on a fresh-clean product, a decent on-time performance and fabulous sandwiches, has attracted a faithful following. Now nobody knows how this has happened and Bhatia isn’t helping. He says he doesn’t think that way. Probe harder and all you get is: “Honesty of purpose which comes from my parents, luck and destiny.” Bhatia is very reticent and this allows him to move unnoticed and surprise people.

At the Paris air show in the summer of 2005, all manner of aircraft from the mammoth A380 to the Su 27 were showing off in the air. A line-up of sheikhs, ministers and generals were signing millions of dollars worth of deals amidst champagne and handshakes. Showmanship was the leitmotif as airlines and vendors pulled out all PR stops to outdo each other. An unexpected development that created ripples that year, was a $6 billion order for 100 planes by an Indian travel technology firm called InterGlobe Enterprises. The order was for its airline venture called IndiGo that had not even been launched. Everyone scrambled to find who was taking such a big bet.

They needn’t have bothered. The InterGlobe promoter and managing director Rahul Bhatia, had given the event a miss.

Actually, Interglobe’s forerunner Delhi Express, a small airline representation firm is a good place to start with to understand Bhatia. Kapil Bhatia, Rahul’s father, started Delhi Express with a partner. It was a well-run airline representation firm, but remained small. After Rahul Bhatia returned from Canada with a degree in electrical engineering from the University of Ontario and a two-year stint with IBM, he decided to scale up operations and started InterGlobe Enterprises. He recognised the huge opportunities opening up beyond the traditional general sales agent (GSA) business of selling tickets.

Over the next 15 years, he displayed an astute sense in picking the best partnerships with companies from around the world and brought them into his Indian ventures. In most cases the partners have invested in the business with him. On the technology side, he first tied up with New York-based Cendant for a stake in InterGlobe Technologies. In the airline business, he roped in former US Airways CEO Rakesh Gangwal as a partner. The hotel business is a joint venture with French hospitality group Accor and for the business jet venture he picked American corporate jet maker Hawker-Beechcraft.

Bhatia scripted each move through the dint of hard work, turning into a road-warrior, putting in 18-hour days and hitting the road sometimes for more than 15 days a month. Rai remembers pinning down Bhatia for meetings at Brusells airport on one occasion and London Heathrow on another, as he flew in and out of the cities. He was rarely in office, but had acquired the reputation of a crack negotiator, jet-setting all over the world to sew up the best deals.

“He inherited the goodwill of his dad’s business and built on it successfully”, says Seema Luthra, who was president and chief executive officer of Galileo and worked with Bhatia for two decades. She quit InterGlobe two years ago to start her own entrepreneurial venture. Bhatia also showed that he could take the long view needed to build an organisation.

In 2001, Luthra was heading sales and marketing for United Airlines on behalf of Interglobe Air Transport (IGAT), an off-shoring company that catered to large international airlines from India. After 9/11, United Airlines, one of the largest clients of InterGlobe announced it was stopping flights to India on security concerns. This dealt the Indian company a body blow. Massive investments had been made for the United Airlines operations in India and business was roaring. When overnight revenues started dropping, there was tremendous insecurity among employees, recalls Luthra.

“Rahul invited me home for dinner to thank the team for the efforts and to reassure everyone that they will be protected. Despite a very difficult period financially, he never let go of a single employee,” she says.

During leadership meetings, he often spoke of the number of families that depend on InterGlobe and how decisions need to be taken keeping them in mind. “In my 20 years,” she says, “I do not recall a single year, including the bad years, that the employees were not paid their annual bonus.”

He is also a very patient man. He always wanted to start an airline but waited for pioneers like Air Deccan and Jet Airways to develop the market. He also waited for Rakesh Gangwal, who after a successful career with United, US Airways, Air France and Worldspan, advises the private equity arm of a $100 billion Canadian pension fund. Much before IndiGo was launched, he had told friends, if he were ever to get into the business, it would be with Gangwal. The reason could be that Gangwal has an enviable global network and counts people like the Airbus CEO John Leahy among his closest friends.

Bhatia did the hard yards to earn Gangwal’s trust. He first represented the United Airlines when Gangwal was a senior official there. Later, he catered to United’s needs by operating as a BPO. His efforts paid off when Gangwal invested in Bhatia’s IndiGo. “This is one excellent example of how Rahul is able to build on relationships,” says a former senior manager at InterGlobe.

And he went about building IndiGo methodically. Pramod Sahni, director CRM Global, who worked for Bhatia for close to 20 years, has many stories to tell about Bhatia’s search for the right talent. “While building Indigo, he would insist on interviewing candidates at every level. From check-in counter people, to crew, sales and marketing staff, they were all hired only after Rahul had met them.” Sahni remembers flying with him to three cities in a day to meet candidates. On one such day we flew from Delhi to Hyderabad to Chennai to Mumbai, interviewing people everywhere, he says. A sad fallout of all the travel for Bhatia is a back problem that troubles him now.

The positive from those days of endless travel is that he is a bit of an expert on food. “Name any city in the world and he will tell you the best places to eat and even offer to make you a reservation,” says Sahni, who has dined with Bhatia at restaurants around the world. Bhatia, with his gourmet friends, owns two award-winning restaurants — China Club in Gurgaon and Piccadeli in New Delhi. “The fact that IndiGo serves the best sandwiches in the sky does not come as a surprise to me,” says Luthra.
And now his love of food is being extended to the hospitality business. This is through a 60-40 hotel joint venture with the French hotel group Accor, to develop a chain of three star hotels under the Ibis brand. The second of 14 such hotels has just opened up in Pune. “The future is in this market and all the figures point to it,” says Bhatia.

But for the moment, the mountains of Whistler in British Columbia, Canada, his favourite holiday destination, beckon and he is heading there for a winter break.