Rahul Bhatia: The Man Behind Low Airfare



Rahul Bhatia: The Man Behind Low Airfare

Rahul Bhatia, the co-founder of the country’s largest and low budget carrier IndiGo Airlines, recently made headline with the strained relationship with his long time partner Rakesh Gangwal. They indulged in a corporate rift over the alleged corporate governance lapse. Rakesh had sent across a letter to Securities and Exchange Board of India, charging that there is an uncertain transaction between InterGlobe Enterprises (IGE) Group and IndiGo, IGE Group’s unusual privilege under the shareholders agreement (SHA) and the women directors’ onboarding. These were the three complaints Rakesh charged. While Rahul countered these allegations stating that it was under the IGE’s nutriment IndiGo has evolved to this extend and also the major financial risk was managed by Rahul himself.

Invading Business World

Rahul completed his engineering from University of Waterloo, and held two years of experience from IBM, which he had acquired as a student. He was intending to pursue PhD and aspired to be a teacher. But his destiny had different plans in store for his future. His father Kapil Bhatia was running a travel agency ‘Delhi Express’, which was co-founded with nine other partners in 1964. Considering his father’s deteriorating health, unwilling Rahul joined his father’s business in 1988. Past three years is when he and his father realized that few of the company’s partners have confidentially acquired majority of the company’s stake by buying its equity. Consequently, Rahul and his father were forced out of the company.

This incident triggered Rahul to set up his own business; this time he had to start from the square one. With $37,000 as seed capital, he initiated InterGlobe- which handled the IT & BPO services majoring in hospitality, travel & transport. It was a tough beginning for Rahul, especially managing the financial crisis. But Rahul’s vast network was a blessing in disguise, which attracted all the airlines associated with his old travel agency to InterGlobe. Since then it was no looking back for Rahul, as the company entered into joint venture with the Galileo International in 1999 to provide back-office services. InterGlobe then went on to attain conglomerate status by expanding its business into technology, retails, travel, hospitality and more.

Birth of IndiGo

While in his glorious period, Rahul came in contact with his future partner Rakesh Gangwal (CEO, US Airways). This is when the idea struck him to kick start his own airline. He pitched this idea to Rakesh, but he was ambivalent over this idea considering the monetary figure the airline industry takes in. With Rahul’s continuous perseverance, Rakesh had to eventually give in. During the dinner at the Bhatias, Rakesh stated, “Look, you guys decide how much money you want to lose. I will work with you. I don't want any part of this business. I will give you all my knowledge or whatever experience I have. But once you have lost that money, shake hands and remain friends”. Thus IndiGo Airlines took birth.

The airline had obtained its license in 2004, Rahul held 51.12 percent share while Rakesh has 48 percent in IndiGo. With lot of guts, Rahul ventured the airline industry in 2006, when the aviation fuel rates were at its peak. In addition to this, he placed a shocking order for 100 Airbus A320-200 to begin his airline operation. After four years of its commencement, IndiGo placed itself in third position among the country’s largest airlines. The following year, the company further obtained 180 Airbus A320 neo aircraft which was worth $15 billion, along with this it even acquired permission to set up international flights. By the passing years, the airlines became the most profitable airline in the nation, also being the low cost carrier.

For his entrepreneurial achievements Rahul was honoured with Ernst & Young Entrepreneur of the Year 2010, and Economic Times Entrepreneur of the Year2011.

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