As airline turbulence goes, not many can equal Ronojoy Dutta in experience and insights. His battle scars from the global aviation industry’s worst nightmare, the 9/11 attacks, stand testimony to that.
And InterGlobe Aviation, which owns India’s low-cost private carrier IndiGo, must have counted on just that when it announced yesterday (Jan. 24) that Dutta has been appointed CEO of the company.
The airline, India’s biggest by market share, is in need of some drastic manoeuvres. It posted a loss of Rs652 crore ($92million) in the July-September quarter of financial year 2019—the first time it went into the red since listing on the stock exchange three years ago. It corrected course in the October-December quarter, but profits were about 75% lower year-on-year at Rs190.9 crore.
While 67-year-old Dutta’s been working on a five-year business plan for IndiGo ever since he was made a principal consultant in December, now he will be in direct control.
Soaring into global skies
Brought up in Shillong, Meghalaya, in India’s northeast, Dutta is a graduate of the Indian Institute of Technology Kharagpur and an MBA from Harvard Business School.
He joined United Airlines in the US in 1984 and went on to serve as its chairman from 1999 to 2001. Indeed, he was only the second Indian to head an American airline—the first, none other than IndiGo co-founder Rakesh Gangwal, who was CEO and chairman of US Airways from 1998 to 2001 (Gangwal also worked at United from 1984 to 1994—his time there coinciding with Dutta’s).
Dutta has described his years at United as “the best thing that happened to me.” Perhaps, it was also the worst.
On Sept. 11, 2001, hijackers crashed a United flight into the World Trade Center in New York and another in Pennsylvania.
The airline was already making losses, and 9/11 dealt the final blow. Passenger traffic dropped in the months following the attack. In 2002, United filed for bankruptcy with nearly $1 billion in debt. Dutta was forced to quit with a $1.6 million payout.
He returned to India as an advisor to Air Sahara in 2004, and was appointed CEO after a few months. The airline had then just launched its international route from Chennai to Colombo, and Dutta helmed its rapid expansion, registering a 35% annual growth in revenue. He quit the company after Air Sahara was bought out by Jet Airways, the country’s oldest private airline.
His arrival at IndiGo last year ruffled a few feathers. Senior advisor and CEO-appointee Greg Taylor quit days after he was made consultant last December, prompting co-founder Rahul Bhatia to take over as interim CEO. The airline had been hunting for a boss after former president Aditya Ghosh quit last year, joining the Gurugram-based hospitality startup OYO.
Dutta takes charge as IndiGo is rapidly expanding its fleet. The carrier added 55 new planes last year, bringing its fleet size to 208 aircraft, and plans an even faster addition this year, Bhatia said on an earnings call earlier this week.
But the airline’s margins are thinning. IndiGo is not alone or the worst-faring in the Indian aviation industry in this regard though.
Throughout last year, airline firms have faced trouble due to rising fuel prices and a depreciation of the Indian rupee weighing down on dollar-denominated expenses. IndiGo’s full-service competitors Jet Airways and Air India are exploring debt-restructuring options amid mounting losses. SpiceJet, another low-cost carrier, has posted losses for two consecutive quarters.
But IndiGo is only expanding its market share on the back of rapid fleet expansion. And after dominating the domestic market, it is increasingly looking beyond Indian shores. During this week’s earnings call, both Bhatia and Dutta emphasised plans to expand IndiGo’s international connectivity, a goal where the new CEO’s decades of expertise would be a major asset.
“For far too long, Indians have not played a role on the world stage,” Dutta told Outlook magazine over a decade ago. “It’s high time we did.”
Whether that time has finally arrived, one must wait and watch.